Calcutta High Court
Gmb Ceramics Ltd vs Neycer (India) Ltd on 24 September, 2018
Author: Arijit Banerjee
Bench: Arijit Banerjee
In the High Court At Calcutta
Civil Appellate Jurisdiction
In Appeal from the order of Ordinary Original Jurisdiction
Original Side
APO 34 of 2016
GA 4026 of 2000
AC 32 of 2000
GMB Ceramics Ltd.
-Vs.-
Neycer (India) Ltd.
With
APOT 42 of 2016
Neycer (India) Ltd.
-Vs.-
GMB Ceramics Ltd.
Before : The Hon'ble The Chief Justice Jyotirmay Bhattacharya
&
The Hon'ble Justice Arijit Banerjee
For the appellant : Mr. Ranjan Deb, Sr. Adv.
Ms. Suparna Mukherjee, Adv.
Mr. Meghajit Mukherjee, Adv.
Ms. Shamayem Fasih, Adv.
For the respondent : Mr. Goutam Chakraborty, Sr. Adv.
Mr. Reetobroto Mitra, Adv.
Mr. Prithwiraj Sinha, Adv.
Mr. S. Dhar, Adv.
Mr. I karfa, Adv.
Heard On : 02.11.2017, 09.11.2017, 16.11.2017, 23.11.2017,
30.11.2017, 18.01.2018, 08.02.2018, 02.08.2018,
16.08.2018, 23.08.2018, 30.08.2018
CAV On : 04.09.2018
Judgment On : 24.09.2018
Arijit Banerjee, J.:-
(1) GMB Ceramics Ltd. (in short 'GMB'), the appellant in APO 34 of 2016
entered into a Consultancy Agreement dated 29 November, 1986 with
Neycer (India) Ltd. (in short 'Neycer') for setting up a factory for
manufacture of vitreous sanitary ware products. The said agreement was
converted into a Collaboration Agreement by an addendum dated 26
June, 1987. Disputes and differences arose between the parties in
relation to the said agreement. The agreement contained an arbitration
clause for resolution of disputes between the parties. The disputes were
referred to Joint Arbitrators nominated by each of the parties. In view of
disagreement between the Joint Arbitrators, the matter was referred to
the Umpire. Learned Umpire published an award dated 23 June, 1999
for Rs. 1169.63 lacs along with interest at the rate of 15 per cent per
annum in favour of GMB. Neycer filed an application under Secs. 30 and
33 of the Arbitration Act, 1940 being GA No. 4026 of 2000 for setting
aside the said award of the Learned Umpire. The said application was
disposed of by the learned Single Judge by a judgment and order dated
14 October, 2015. The learned Judge in effect held that the claim that
GMB referred to arbitration was for a sum of Rs. 2 crores and any award
in excess of that sum cannot be sustained.
Being aggrieved by and dissatisfied with the said judgment and
order of the learned Single Judge, GMB has preferred an appeal being
APO No. 34 of 2016. Neycer has also preferred an appeal being APOT 42
of 2016 contending that the Award should have been set aside in its
entirety. Both the appeals are taken up for hearing and disposal
together.
Contention of GMB:-
(2) Appearing for GMB, Mr. Ranjan Deb, learned Sr. Counsel submitted
that the Collaboration Agreement between the parties provided, inter
alia, as follows:-
(i) Neycer was to make available to GMB technology,
know how expertise including manufacturing process.
Engineering data, consumption norms, fire cycles
utility requirements and all information necessary for
setting up a manufacturing unit for production of
vitreous sanitary wares with installed capacity of 7000
tonnes per annum and manufacturing target of 600
tonnes per annum.
(ii) Neycer would provide its marketing network and
sales infrastructure to GMB.
(iii) GMB would have the right to manufacture and sell
products using the name of Neycer.
(iv) Neycer would train unskilled labour employed by
GMB and would help in selection and training of
personnel, technicians and supervisory staff.
(v) Neycer was to set up the manufacturing unit and
business market of GMB's products.
(vi) Neycer would jointly set up the factory and assist
GMB to obtain guaranteed optimum production in
terms of both quality and quantity.
(3) Mr. Deb submitted that Neycer failed, neglected and/or refused to
perform its obligations under the said Collaboration Agreement. As a
result, GMB suffered substantial loss and damage. According to Mr. Deb,
in view of the breaches committed by Neycer, the said agreement stood
terminated.
(4) In September 1989, Neycer invoked the arbitration clause contained
in the said agreement and nominated its arbitrator. In October 1989,
GMB nominated its Arbitrator. In so far the claim of GMB was concerned,
the Joint Arbitrators were in disagreement and consequently they
referred the disputes and differences to the Umpire. The Umpire passed
an award in favour of GMB as indicated above.
(5) The learned Single Judge while disposing of the application filed by
Neycer, set aside the portion of the award in excess of Rs. 2 crores. Mr.
Deb submitted that there was no specific reference of disputes to the
Arbitrators. The learned umpire culled out the disputes and differences
between the parties from the correspondence exchanged between the
parties contemporaneously. On a meaningful reading of such
correspondence it would be clear that the parties referred all disputes
and differences between them to arbitration. It is not that GMB limited
its claim to cost incurred due to overrun of the contract caused by breach
of Neycer's obligations under the Agreement. Hence, the learned Single
Judge erred in setting aside the portion of the arbitral award in excess of
Rs. 2 crores. We will refer to the relevant correspondence between the
parties later in this judgment.
(6) Mr. Deb relied on two decisions. The first is a decision of this Court
in the case of Juggilal Kamlapat-vs.-N. V. Internationale Crediet-En-
Handels Vereeninging 'Rotterdam' (alias Rotterdam Trading Co Ltd.),
AIR 1955 Cal 65. The other decision that Mr. Deb relied on was that of
the Apex Court in the case of State of Orissa-vs.-Asis Ranjan Mohanty,
(1999) 9 SCC 249. We will revert back to these judgments later.
Contention of Neycer:-
(7) Mr. Gautam Chakraborty, learned Sr. Counsel appearing for Neycer
referred to the same correspondence exchanged between the parties
prior to reference of disputes to arbitration as were referred to by Mr.
Deb. He submitted that it would appear from the said correspondence
that GMB had raised a claim only on account of time overrun. The word
'overrun' has been used in nine different letters written on behalf of
GMB. Nothing more than Rs. 2 crores was claimed by GMB on account of
time overrun till the date of appointment of Arbitrators. GMB could not
reserve any claim for a period beyond the date of appointment of
Arbitrators.
(8) Mr. Chakraborty placed the judgment of the learned Single Judge in
extenso. He submitted that GMB's claim in Schedule E to the statement
of claim which was a claim for loss or profit in the sum of Rs. 396.96 lacs
was entirely speculative and should not have been entertained by the
Learned Umpire. The learned Single Judge also erred in allowing part of
the said claim. According to Mr. Chakraborty, the entire arbitral award
should have been set aside by the learned Single Judge since there was
no evidence on record to support even an award for Rs. 2 crores in favour
of GMB.
Court's view:-
(9) The short question that falls for determination by this Court is
whether or not GMB's claim before the learned Arbitrators/learned
Umpire was restricted to Rs. 2 crores. The Learned Umpire held that the
scope of the reference was not restricted to time overrun for which
approximately Rs. 2 crore was claimed by GMB. Learned Umpire analysed
the correspondence exchanged between the parties contemporaneously
prior to reference of the disputes to arbitration and came to the
conclusion that all the disputes as pleaded in the statement of claim both
before and after amendment, had been referred to arbitration. He held
that there is no merit in the contention of learned Counsel for Neycer
that the only claim that GMB had is the claim of overrun cost of Rs. 2
crores.
(10) The Learned Single Judge differed with the Learned Umpire with
regard to the aforesaid point. According to the learned Single Judge,
GMB's claim was restricted to Rs. 2 crores. Thus, it is necessary for us to
analyse the pre-reference correspondence between the parties to decide
whether the learned Single Judge was justified in coming to the
conclusion as stated above.
(11) A letter dated 9 August, 1989 was written by the Managing Director
of GMB to the Managing Director of Neycer which reads as follows:-
"Dear Sir,
On my return from Madras after having discussions
with you on 7th and 8th August, 1989, I received your
letter dated 30th July, 1989 in regard to Mr. Umatosh
Sarkar.
As mutually discussed and agreed in our meeting at
Madras, we will not offer him employment on our Roll
but take his advice to run the show of the factory until
you depute a senior technician of general supervisory
level to stay at our factory until the optimum level of
production is achieved.
In order to avoid delay we would be thankful if you
inform us whom you are intending to send so that we
may discuss with Mr. R. M. Mehra, one of our Board
Members to assess the suitability of the person. Since
Mr. Mehra was president of your company for many
years, it will be very easy for him to judge the
suitability and acceptability of such a person as
because it is implied that the person you intend to
send will be of your company only having all technical
knowledge and competency for general supervision.
As informed to you, we have already come to the stage
of trial production and your quick action on the matter
will be of great help to us to come out with our
production in the market as because the delay is
causing a lot of overrun in the form of interest,
depreciation and overheads.
During our meeting with Mr. Kale, the Managing
Director of NCRL on 03.12.88 and 05.12.88 it was
decided then also that a senior technician as described
above will be deputed immediately but was not
deputed with the result that such delay as already
been caused to us to come out with the production
which we were contemplating sometime around March,
1989 end."
(12) This was followed by a letter dated 28 August, 1989 written by the
Managing Director of GMB to the Managing Director of Neycer complaining
that with regard to deputing a senior level man for general supervision of
setting up of GMB's factory, the same had still not been done resulting in
overrun cost of Rs. 2 crores. It was also stated that with regard to sale
assistance, it was not clear about the help that Neycer would extend to
GMB and Neycer was requested to inform GMB as to what sales
infrastructure Neycer has got and how Neycer intended to assist GMB.
(13) In response Neycer wrote a letter dated 29 August, 1989 stating
therein that it was in no way responsible for the cost overrun and that
Neycer had fulfilled its obligations under the Collaboration Agreement.
(14) By a letter dated 4 September, 1989 GMB again complained of non-
performance of Necyer's obligations under the Collaboration Agreement.
The material statements in the said letter are as follows:-
"........ IS IT NOT REALLY VERY SURPRISING THAT A
AMAN FOR GENERAL SUPERVISION SHOW YOU HAD
AGREED TO BE SENT FOR OUR FACTORY AFTER OUR
MEETING ON 3RD AND 5TH DEC., 1988 COULD NOT BE
SENT UNTIL NOW. .......... IT WAS EXPECTED THAT YOU
WOULD TAKE NECESSARY CARE TO FULFIL YR
OBLIGATION AS PER THE COLLABORATION AGREEMENT.
I THEREFORE STILL STAND ON MY VIEWS THAT THE
COST OVERRUN SHOULD DEFINITELY BE CLAIMED FROM
YOU BECAUSE IN ABSENCE OF YOUR POSTING A SENIOR
LEVEL PERSON FOR OUR GENERAL SUPERVISION OUR
PRODUCTION HAS BEEN DELAYED CONSIDERABLY.
MOREOVER, Mr. U. SARKAR HAS BEEN COMING WITH A
STOP GAP ARRANGMENT AND YOUR OTHER
TECHNICIANS COMING TO BALASORE FREQUENTLY HAVE
NOT RELINQUISHED YOU FROM THE OBLIGATION FROM
PUTTING UP A SENIOR LEVEL PERSON FOR YOUR
GENERAL SUPERVSION TO HAVE PROPER CONTROL ON
THE DAY TO DAY WORKING. I THEREFORE STILL HOLD
NCRL RESPONSIBLE FOR THE OVERRUN...............
WITH REGARD TO SALES ASSISTANCE SINCE YOU DO NOT
HAVE ANY SALE INSFRASTCUTURE OF NEYCER AND HAVE
NOT MADE ANY PROPOSAL TO US........................ WE ARE
GOING AHEAD ORGANIZING SALES AND HERE ALSO WE
FEEL THAT YOU HAVE NOT BEEN ABLE TO PERFOM AS
PER CONTRACT AND THEREFORE YOU ARE NOT ELIGIBLE
TO GET 2 PER CENT COMMISSION AND ALSO FOR CLAIM
OF DAMAGE CAUSED TO US..............."
(15) This was followed by a letter dated 7 September, 1989 written by
Neycer to GMB making counter allegations. It was inter alia stated in the
said letter that GMB was entirely responsible for the delay in
arrangement of general supervisor. Further, regarding use of brand name
GMB would not be entitled to use Neycer's brand name in view of the
numerous breaches made by GMB and obstructions caused in
implementation of the contract. In conclusion, it was stated that the
best course of action would be to have a meeting to discuss and settle all
matters amicably.
(16) In response, GMB wrote a letter to Neycer reiterating that the time
overrun and other damages had been caused by Neycer's breach of
obligations under the Collaboration Agreement. It was also stated in the
said letter that Neycer had failed to perform its obligations under the
Collaboration Agreement and therefore, GMB would definitely have a
claim against Neycer for time overrun apart from the damages which had
been caused to GMB by not providing any sales assistance. It was further
stated in the said letter as follows:-
"WHILE OUR CLAIM FOR DAMAGES AND OVERRUN IN
THIS RESPECT STILL STAND, WE ARE DENINITELY
ENTITLED TO USE YOUR BRAND NAME. LASTLY, A
STAGE AS COME WHERE WE ARE COMPELLED TO
MENTION THAT YOU HAVE ALWAYS ULTERIOR MOTIVE
TO SEE HOW GMB DO NOT COME UP FOR WHICH WE
HAVE CONVINCED NOTIONS WITH FACTS N
FIGURES........"
(17) On 19 September, 1989 Neycer wrote a letter to GMB stating
therein inter alia as follows:-
"as you are aware, certain disputes have arisen
between our company and yourselves regarding the
respective rights and obligations under the aforesaid
Collaboration Agreement read with the addendum
thereto..........from the exchange of such
correspondence and your action, including entertaining
of an ex-employee or ours, we have to conclude that
you are not interested in honouring your commitments
under the agreement, but, on the other hand, you only
want to secure and utilize the licence which we had
agreed to grant you to use our logo as part of the mark
of you product for marketing the same. You cannot
expect us to grant such a licence in view of your
breaches of the Collaboration Agreement and your
attempt to claim the right only to the use of the logo
as a licensee while giving a go-by to the rest of the
agreement.........
Inasmuch as the contract between the parties provides
for a reference of all disputes to arbitration, we
hereby invoke the said clause and we have appointed
Retd. Justice P. Rama Rao as one of the Arbitrators and
call upon you to nominate an Arbitrator within 15 days
from the date of receipt of this notice............the
dispute referred to the said Arbitrators will be the
compensation payable to us for the breaches of
Collaboration Agreement committed by you and your
disentitlement to any licence or permission to use the
logo. You are also hereby put on notice that failure on
your part to nominate an Arbitrator to decide the said
disputes and any other dispute that may be raised
between the parties will result in our nominee being
nominated as sole arbitrator to proceed with the
arbitration ......................" (emphasis is ours)
(18) On 6 October, 1989 GMB wrote a letter to Neycer, the material
portion whereof is as follows:-
"..........WE WILL HENCEFORTH NOT PUT YOUR BRAND
NAME ON OUR WARE. THIS WILL CREATE A LOT OF
HURDLES FOR US BUT WE WANT TO MINIMIZE THE AREA
OF CONFUSION COMPLICATIONS. REG. OTHER
PICTORIAL PREPRESENTATIONS ON STATIONARY WE
WILL USE IT UNTIL OUR NEW STATIONARY RE PRINTED,
AND WHATEVER WARES HAVE BEEN MANUFACTURED SO
FAR (WHICH ARE NOT VERY MUCH IN QUANTITY) WE
WILL SALE THEM WITH YOUR BRAND NAME UNLESS YOU
WANT TO STOP SENDING THE SAME TO MARKET. IN
WHICH CASE, THE AMOUNT OF THE SAME WILL HAVE TO
BE BORNE BY YOU.
NOW THE MATTER BOILS DOWN TO OUR CLAIM FOR
OVERRUN AMOUNT ONLY FOR WHICH WE WILL DECIDE
ABOUR THE NAME OF ARBITRATOR AND LET YOU KNOW
IN DUE COURSE......."
(19) This was followed by a letter dated 19 October 1989 written by GMB
to Neycer intimating that GMB had appointed Mr. O. P. Jhunjhunwala,
Advocate, as its nominee arbitrator for adjudication of its claim "for over
Rs. 2 crore in respect of all our losses sustained and is being sustained by
us due to various breaches committed and still being committed by you
under the said agreement."
(20) On 24 October, 1989 GMB wrote a letter to Neycer, the material
portion whereof is reproduced hereunder:-
"..................In spite of assurances and discussions held
with your Mr. Kale, erstwhile Managing Director, no
support or any action was taken by the new
management of your company in spite of our repeated
reminders and requests......
In view of non-fulfilment and your breaches, as stated
aforesaid, the cost of our projects escalated to
abnormal high and we were forced to ask for further
financial assistance/loan for overrun of over Rs. 2
crores from financial institutions; for which you are
solely responsible and for such overrun of our project
we are claiming from you.........
Due to your indifference and non-cooperative attitude,
we are unable to set up a proper sale organization for
marketing our products, and, as such, we are
sustaining huge monetary losses, and we reserve our
right to claim all losses sustained and to be sustained
by us on account of this obligation......
We agree not to use your brand name in our products
reserving our rights to claim all damages and
compensations from you without prejudice to our
rights and contentions in the matter.......
Due to several breaches of the Collaboration
Agreement committed by you, we have sustained huge
monetary losses and are still sustaining losses ........"
(21) In response, Neycer wrote a letter dated 13 November 1989 dealing
with all the allegations made in GMB's letter dated 24 October, 1989.
(22) The claims made by GMB in the statement of claim were on six
counts as indicated in Schedules A to F to the statement of claim. The
statement of claim was subsequently amended. Amended claims are
indicated in Schedules A to F to the amended statement of claim. The
heads of claim, original amount claimed, amended amount claimed,
award given by Learned Umpire against each claim and the findings of the
Learned Single Judge regarding each claim may be conveniently
summarised in a Tabular form as follows:-
SCHEDULES Original Amended Award given by Findings of Learned Single
Statement of Statement the Ld Umpire Judge
Claim of Claim
"A" 60.27 Lakhs 61.52 Lakhs 39.15 Lakhs Sustained
[Damages for delay
in commissioning]
"B" 15.00 Lakhs 15.66 lakhs (Disallowed) Not Considered
[Research &
Technology
Development
Expenditure]
"C" 350.00 Lakhs 350.00 Lakhs 203.43 Lakhs GMB not entitled to any
[Damages for sum
preventing GMB to
use logo GMB-
Neycer]
"D" 199.43 Lakhs 123.61 Lakhs 123.61 Lakhs Award for Rs. 123.61 Lakhs
[Damages for N's granted by Ld Umpire
failure, neglect & accepted
refusal to set up
inter alia sales
personnel
recruitment &
dealer's network &
dealer's network &
guidance for
marketing policy]
"E" 187.22 Lakhs 396.96 Lakhs 346.45 Lakhs Award paseed by Ld
[Damage for loss of Umpire for Rs. 346.45
profit due to delay Lakhs accepted.
of 1 year in
achieving optimum
production which the
Company proposed
to obtain by Nov.
1990]
"F" 70.81 Lakhs 770.82 Lakhs 456.99 Lakhs Learned Single Judge did
[Claim for Payment not give any finding as
of interest on a/c of according to the Learned
delay in Single Judge the claim of
commissioning plant] GMB was already satisfied
(24) In the award the learned Umpire observed that there can be no
doubt that when the terms of reference are clear and specific, the
Arbitrator has no jurisdiction to act beyond the terms of reference. As
regards the scope of the reference, i.e., whether it was restricted to
GMB's claim on account of cost overrun or whether it encompassed all
the claims made by GMB, in the statement of claim as amended, after
analysing the pre-reference correspondence exchanged between the
parties which we have adverted to above, the learned Umpire held as
follows:-
(i) In the instant case, there was no clear or specific reference of
disputes. Neither party has produced any letter addressed to the
Arbitrator nominated by it referring disputes. The disputes between the
parties which were referred to arbitration have to be culled out from the
correspondence exchanged between the parties.
(ii) The expression 'overrun amount' is not specific but very wide.
Under the agreement between the parties, the collaborator (Neycer) was
required to endeavour to commission GMB's plant within 18 calendar
months from the date of sanction of term loan by financial institutions.
(iii) The term loan was sanctioned on 19 May, 1987. Hence, the plant
should have been commissioned by 19 November, 1988 which was
extended by mutual agreement up to 31 January, 1989. Even by the
extended date Neycer failed and neglected to commission the plant
which could only be commissioned on 7 December, 1989. Hence, there
was a delay of about 11 months in commissioning the plant. During the
overrun time period GMB must have incurred overrun costs and suffered
damages. The expression 'overrun amount' includes within it both costs
incurred and damages suffered.
(iv) With reference to GMB's letter dated 19 October, 1989 referred to
above, the learned Umpire held that the disputes mentioned in the said
letter relate to all losses sustained and were being sustained by GMB due
to various breaches committed and still being committed by Neycer. The
disputes enumerated in the said letter embraced all claims and disputes
as pleaded in the statement of claim including the claim on account of
GMB's deprivation of the use of the brand name or logo.
(v) With reference to GMB's letter dated 24 October, 1989 the learned
Umpire held that by the said letter GMB had reserved its right to claim all
losses sustained by it on account of breach of Neycer's obligations under
the Collaboration Agreement.
(vi) The learned Umpire concluded that all the disputes and claims
appearing in the statement of claim, both before and after amendment,
had been referred to arbitration.
(25) Accordingly, the learned Umpire proceeded to consider each claim
of GMB and made his award in respect thereof as would appear from the
tabular statement set out above.
(26) The learned Single Judge, however, disagreed with the learned
Umpire. His Lordship held as follows:-
"I have considered the submissions of the learned Sr.
Counsels and the relevant documents as well as the
Award. The message sent by GMB appointing Mr. O. P.
Jhunjhunwala as its nominee arbitrator for
adjudication of claim for over Rs. 2 crores in respect of
all the losses sustained and was being sustained by it
due to various breaches including those committed and
still being committed by Neycer under the agreement.
The letter is absolutely clear and specific. There is no
scope to put any meaning other than the one that
appears from a plain reading of the letter itself. The
effort to interpret the words 'all the losses sustained
by GMB' as embracing all the claims and disputes as
pleaded in the claim petition is a rather laboured one.
Consequently, it is an error on the face of the Award
and an impermissible one. When this message had
been sent in October, 1989, the statement of claim was
not filed. Therefore, there was absolutely no scope to
refer to all the disputes subsequently raised as being
covered by the disputes referred to in the earlier
letter.
..........................
Reading these communications both together and separately, the Court is left with no other alternative but to agree with, even keeping in mind the parameters and scope of restricted interference, the contention of the petitioner that the scope of reference could not be extended beyond what was mentioned in the letter dated October 19, 1989, i.e., Ext. G/71, more so, as it was by this letter that the claimant had appointed its nominee Arbitrator. It is by this letter that the Arbitrator was nominated by the respondent herein for adjudication of their claim for Rs. 2 crores due to various alleged breaches on the part of the petitioner and Rs. 2 crores was quantified as the losses suffered by GMB on all counts.
Therefore, there was hardly any scope for the Umpire to exceed the jurisdiction or scope of reference beyond the same. The other claims that the Umpire entertained were obviously outside the scope of the reference and, therefore, beyond his jurisdiction. .........
Thus, from the discussion I hold that claim of the respondent should have been restricted to Rs. 2 crores as the overrun cost. The Umpire exceeded his jurisdiction in entertaining the claims beyond it........" (27) Thus, the learned Single Judge came to the conclusion that GMB was not entitled to raise any claim in excess of Rs. 2 crores before the Arbitral Tribunal. The learned Judge sustained the learned Umpire's Award or Rs. 39.15 lacs on account of damages for delay in commissioning GMB's plant. GMB's claim of Rs. 15.66 lacs on account of Research and Technology Development expenditure which had been disallowed by the Learned Umpire was not considered by the learned Single Judge. The Learned Umpire's award of Rs. 203.43 lacs on account of damages for Neycer preventing GMB to use the logo GMB-Neycer was set aside by the learned Single Judge. The Learned Umpire's award of Rs. 123.61 lacs on account of damages for Neycer's failure, neglect and refusal to set up, inter alia, sales personnel recruitment and dealers' network and guidance for marketing policy was upheld by the learned Single Judge. As regards GMB's claim on account of damages for loss of profit due to delay of one year in achieving optimum production, the learned Umpire had awarded Rs. 346.45 lacs. However, the learned Judge held that the said amount in its entirety cannot be allowed under Schedule E since Rs. 1,62,75,910/- (Rs. 39,14,910+123.61 lacs) has already been allowed under Schedules A and D respectively. 'Therefore, the remaining portion of the total permissible claim of Rs. 2,00,00,000 minus Rs.1,62,75,910 i.e., Rs. 37,24,090/- is allowed under Schedule E'. Thereafter, the learned Judge went on to hold:- 'After finding the total amount of damages that can be awarded in favour of the claimant has been satisfied, the other claims need not be gone into.' (28) Before we proceed further, it may be helpful to recount the law laid down by the Apex Court in relation to an application under Secs. 30 and 33 of the Arbitration Act, 1940. The said Sections are set out hereunder:-
"S.30. Grounds for setting aside award._An award shall not be set aside except on one or more of the following grounds, namely:
(a)That an arbitrator or umpire has misconducted himself or the proceedings;
(b) That an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;
(c) That an award has been improperly procured or is otherwise invalid.
S. 33. Arbitration agreement or award to be contested by application._Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits:
Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit."
In the case of Puri Construction Pvt. Ltd.-vs.- Union of India AIR 1989 SC 777, the Apex Court held that when a court is called upon to decide the objections raised by a party against an arbitral award, the jurisdiction of the Court is limited, as expressly indicated in the Arbitration Act, and it has no jurisdiction to sit in appeal and examine the correctness of the award on merits. A Court while examining the objections taken to arbitral award is not required to examine the correctness of the claim on merits. It is not open to the Court to examine the correctness of an award on a reappraisal of the evidence.
In the case of M/s. Sudarsan Trading Co.-vs.-The Govt. Of Kerala & Anr., AIR 1989 SC 890, Sabyasachi Mukharji, J., speaking for the Division Bench observed that an Arbitrator in deciding a dispute under a contract is surely bound by the contract. However, the court cannot substitute the decision of the arbitrator as to what was meant by the contract, once that decision is conceded to the arbitrator. At paragraphs 35 and 36 of the reported judgment it was held as follows:-
"35. In the instant case, the High Court seems to have fallen into an error of deciding the question on interpretation of the contract. In the aforesaid view of the matter, we are of the opinion that the High Court was in error. It may be stated that if on a view taken of a contract, the decision of the arbitrator on certain amounts awarded is a possible view through perhaps not the only correct view, the award cannot be examined by the court in the manner done by the High Court in the instant case.
36. In light of the above, the High Court, in our opinion, had no jurisdiction to examine the different items awarded clause by clause by the arbitrator and to hold that under the contract these were not sustainable in the facts found by the arbitrator."
In Associated Engineering Co.-vs.-Government of Andhra Pradesh & Anr., AIR 1992 SC 232, the Apex Court observed that an Arbitrator's function is to arbitrate in terms of the contract. He cannot act arbitrarily, irrationally, capriciously or independently of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract he has acted without jurisdiction. But if he has remained inside the parameters of the contract and has construed the provisions of the contract, his award cannot be interfered with unless he has given reasons for the award disclosing an error apparent on the face of it. If the Arbitrator commits an error in the construction of the award, that is an error within its jurisdiction. In the facts of that case, however it was held that the Umpire had out-stepped the confines of the contract and had decided the matter strikingly outside his jurisdiction.
In Paradip Port Trust & Ors.-vs.-Unique Builders, (2001) 2 SCC 680, the Apex Court observed that from several decisions of the Apex Court and the provisions contained in the Arbitration Act, 1940, it is clear that generally an award passed by the Arbitrator is considered binding between the parties for the reason that the parties select the arbitrator and powers of the Court to set aside the award are restricted to cases set out in Sec. 30 of the Act. The jurisdiction of Courts including High Courts is not independent of the statute. The arbitrator's award is final both on facts as well as law. There is no appeal from his verdict. However, an award can be set aside only in situations specified in Secs. 30 and 33 of the Act.
In Bharat Coking Coal Ltd.-vs.-Annapurna Construction, (2003) 8 SCC 154, the Apex Court observed, inter alia, that if an arbitrator has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameters of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the record.
(29) Let us first take the point of scope of the arbitral reference. It is not in dispute that there was no specific reference of disputes by either of the parties when they nominated their respective Arbitrators. In other words, specific heads and amounts claimed under each head were not enumerated in the letters whereby Arbitrators were nominated. Hence, in our opinion, the learned Umpire rightly held that the disputes that formed the subject matter of the reference would have to be gathered from the pre-reference correspondence exchanged by and between the parties. We have set out the relevant portions of such correspondence in this judgment for the sake of convenience. We have no doubt in our mind that the scope of the reference was not restricted to overrun amount of Rs. 2 crores. To that extent, we are in disagreement with the learned Single Judge and His Lordship's finding to that effect is set aside.
(30) In our view, all the disputes and differences between the parties were referred to arbitration. This would be clear from Neycer's letter dated 19 September, 1989 referring 'the said disputes and any other dispute that may be raised between the parties' to arbitration. Further, we agree with the learned Umpire that the term 'overrun amount' is one of very wide connotation. It would include within its ambit all kinds of loss and damage sustained by an aggrieved party by reason of overrun of a contract caused by breach of obligation of the other party to a contract. As aforesaid, the way we read the pre-reference correspondence exchanged between the parties is different from the way in which the learned Judge read the same. Our reading is the same as that of the learned Umpire. Further, the way in which the learned Umpire construed the correspondence between the parties, cannot be said to be perverse or arbitrary or unreasonable. It is surely a plausible manner of reading the correspondence between the parties as a whole. It is trite law that so long as the meaning given by an Arbitrator/Umpire to a document or a series of documents is a plausible one, the Court will not interfere and substitute such meaning with its own understanding of such documents even if the Court differs from the Arbitrator or Umpire. The Court in exercise of an application under Secs. 30 and 33 of the Arbitration Act, 1940 does not act as an Appellate Court. (31) Although a point was taken by Neycer in the pleadings filed by it before the Arbitral Tribunal that GMB's claim in excess of Rs. 2 crores is not within the scope of the reference, Neycer resisted the entire claim raised by GMB on merits by adducing evidence before the Arbitral Tribunal. Having contested all the claims raised by GMB on merits, in our view, it is not open to Neycer to contend that GMB's claim was restricted to Rs. Crores.
(32) Hence, we are of the firm view that there was no reason for the learned Judge to restrict the award under Schedule E to Rs. 37,34,090/- while in principle upholding the learned Umpire's award of Rs. 346.45 lacs on that count.
(33) We also find no justification in the learned Judge disallowing the learned Umpire's award of Rs. 203.43 lacs on account of damages for preventing GMB to use the logo GMB-Neycer. The learned Umpire has discussed the said claim in great details and analysed the evidence, both oral and documentary in respect of the said claim with great care. A Court hearing an application for setting aside an arbitral award does not have the power to reappraise the evidence before the Arbitrator/Umpire. So long as there is some evidence on the basis of which an award has been made, the Court shall not go in the sufficiency or otherwise of such evidence. Only if an award is based on no evidence at all, the court would be justified in interfering. We have carefully gone through the award of the learned Umpire and we are of the considered view that the same is supported by evidence. It is not for the court to enquire into the veracity or adequacy of such evidence.
(34) Mr. Deb relied on the Apex Court decision in the case of Juggilal Kamlapat-vs.-N. V. Internationale Crediet-En-Handels Vereeninging 'Rotterdam' (alias Rotterdam Trading Co Ltd.), (supra). It was held in that case that where no specific sum is claimed and the particulars of the claim are not given in the statement of claim the arbitrators may be guilty of misconduct if they make an award for a definite sum of money without calling for particulars of the claim and without giving opportunity to the other party to meet the specific case. In that case the petitioner who was challenging the arbitral award before the High Court had contended that there was no pre-existing dispute with regard to the quantum of damage prior to the date of reference before the arbitral Tribunal and the Arbitrators had no jurisdiction to decide the quantum of damage. Such contention was negated by the Learned Judge. It was held that the correspondence exchanged between the parties prior to the reference showed that there was a dispute between the parties with regard to breach of contract and consequently damages. The jurisdiction of the Arbitrator was therefore attracted and the Arbitrator was competent to assess the damages. The claim for a definite sum of money is not a condition precedent to the exercise of jurisdiction of the Arbitrator. Indeed, on a general submission the Arbitrator could determine and assess even prospective damages arising after the date of the submission.
(35) In State of Orissa-vs.-Asis Ranjan Mohanty (supra), it was held that if subsequent claims raised by the claimant pertain to the disputes which were in existence at the time when the arbitration clause was invoked and were within the scope of arbitration clause and reference, the same can be raised. Additional claims raised by the claimant subsequently could be considered by the Arbitrator. (36) These two decisions support the view we have taken regarding arbitrability of all the disputes and claims raised by GMB in the arbitration proceeding.
(37) In view of the aforesaid, we find no reason to interfere with the award of the Learned Umpire. Mr. Chakraborty, Learned Sr. Counsel, appearing for Neycer argued in his appeal that even the sum of Rs. 2 crores should not have been sustained by the learned Single Judge as there was no evidence to support such claim. We are unable to accept such submission as we have already indicated that in our view the learned Umpire's award cannot be said to be based on no evidence. (38) No case has been made out by Neycer that the Learned Umpire misconducted himself or the arbitral proceedings or that the Arbitral Award has been improperly procured or is otherwise invalid. No ground for interference with the Award has been made out. (39) In the result, GMB's appeal succeeds. The impugned judgment and order is set aside to the extent it interferes with the award of the Ld. Umpire. The Ld. Umpire's award is upheld. Neycer's appeal stands dismissed.
(40) APO 34 of 2016 and APOT 42 of 2016 are accordingly disposed of. There will, however, be no order as to costs.
(41) Urgent certified photocopy of this judgment and order, if applied for, be given to the parties upon compliance of necessary formalities. I Agree.
(Jyotirmay Bhattacharya, CJ.) (Arijit Banerjee, J.) Later:
After the judgment is delivered, prayer is made on behalf of Neycer for stay of operation of this judgment and order for a period of three weeks. To give an opportunity to Neycer to approach the higher forum, let the operation of this judgment and order remain stayed for a period of three weeks from date.
(Jyotirmay Bhattacharya, CJ.) (Arijit Banerjee, J.)