Delhi High Court
Sanyukt Nirmata vs Union Of India (Uoi) And Ors. on 26 February, 2002
Equivalent citations: 2002VAD(DELHI)466, 2002(62)DRJ858
Author: Vikramajit Sen
Bench: Dalveer Bhandari, Vikramajit Sen
JUDGMENT Vikramajit Sen, J.
1. The following observations of the Apex Court in Union of India v. Rallia Ram, , have not been varied and still hold the field despite the passage of forty years, and numerous subsequent judgments on the subject.
"An award being a decision of an arbitrator whether a lawyer or a layman chosen by the parties, and entrusted with power to decided a dispute submitted to him is ordinarily not liable to be challenged on the ground that it is erroneous. In order to make arbitration effective and the awards enforceable, machinery is devised for lending the assistance of the ordinary Courts. The Court is also entrusted with power to modify or correct the award on the ground of imperfect form or clerical errors, or decision on questions not referred, which are severable from those referred. The Court has also power to remit the award when it has left some matters referred undetermined, or when the award is indefinite, or where the objection to the legality of the award is apparent on the face of the award. The Court may also set aside an award on the ground of corruption or misconduct of the arbitrator, or that a party has been guilty of fraudulent concealment or willful deception. But the Court cannot interfere with the award if otherwise proper on the ground that the decision appears to it to be erroneous. The award of the arbitrator is ordinarily final and conclusive, unless a contrary intention is disclosed by the agreement. The award is the decision of a domestic tribunal chosen by the parties, and the Civil Courts which are entrusted with the power to facilitate arbitration and to effectuate the awards, cannot exercise appellate powers over the decision. Wrong or right the decision is binding if it be reached fairly after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement. But it is now firmly established that an award is bad on the ground of error of law on the face of it, when in the award itself or in a document actually incorporated in it, there is found some legal proposition which is the basis of the award and which is erroneous".
2. Acknowledging that the Arbitrator is the final judge of facts, the Apex Court in State of Orissa and Anr. v. Kalinga Construction Co. (P) Ltd., held that the High Court erred in considering the matter as a court of appeal and in re-evaluating the evidence and that it further erred in recording a finding in reversal of the conclusions of the arbitrator. In Hindustan Iron Co. v. K. Shashikant & Co., the Court held that the award of the Arbitrator ought not to be set aside for the reason that, in the opinion of the Court, the Arbitrator had not reached wrong conclusions or failed to appreciate the facts.
3. In Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar and Anr., the Court held that if the reasons appear per se to be not unreasonable and irrational the Court ought not to reappreciate the evidence. It approved the observations made in Mediterraneam & Eastern Export Co. Ltd. v. Fortress Fabrics Limited, (1948) 2 ALL ER 186, which are as follows - "A man in the trade who is selected for his experience would be likely to know and indeed to be expected to know the fluctuations of the market and would have plenty of means of informing himself or refreshing his memory on any point on which he might find it necessary os to do. In this case according to the affidavit of sellers they did take the point before the Arbitrator that the Southern African market has slumped. Whether the buyers contested that statement does not appear but an experienced Arbitrator would know or have the means of knowing whether that was so or not and to what extent and I see no reason why in principle he should be required to have evidence on this point any more than on any other question relating to a particular trade. It must be taken I think that in fixing the amount that he has, he has acted on his own knowledge and experience. The day has long gone by when the Courts looked with jealousy on the jurisdiction of the Arbitrators. The modern tendency is in my opinion more especially in commercial arbitrations, to endeavor to uphold awards of the skilled persons that the parties themselves have selected to decide the questions at issue between them. If an arbitrator has acted within the terms of his submission and has not violated any rules of what is so often called natural justice the Courts should be slow indeed to set aside his award." That this is a well settled proposition of law was reiterated in the decision of the Apex Court in Coimbatore District Podu Thozillar Sangam v. Balasubramania Foundary and Ors., . It was opined that it is only an error of law and not a mistake of fact, committed by the arbitrator, which is justiciable in the Application/Objection before the Court. If no legal proposition emerges from a perusal of either the Award or any document annexed with the Award which is erroneous, and the alleged mistakes or alleged errors, are only mistakes of fact, and if the Award is made after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement, the Award is not amenable to the correction of the Court. Similar views were again expressed in Indian Oil Corporation Ltd. v. Indian Carbon ltd., ; Jawahar Lal Wadhwa and Anr. v. Haripada Chakroberty, ; Puri Construction Pvt. Ltd. v. Union of India, ; Sudarsan Trading Co. v. Government of Kerala and Anr., (1989) 2 SCC 30; Food Corporation of India v. Joginderpal Mohinderpal and Anr., where even a plausible view taken by the Arbitrator was held not to be open to Court interference, if the latter preferred a contrary or alternate view.
4. In U.P. Hotels etc. v. U.P. State Electricity Board, , the decision of the Umpire had been challenged in respect of his interpretation of Section 49 of the Electricity (Supply) Act. Even on this aspect, which quite palpably takes on the characteristics of a point of law in contradiction to point a fact, the Apex Court did not favor jural intervention. It observed that "the view taken by the Umpire on Section 49 was a possible view in the light of the decision of this Court in Indian Aluminium's case. In the premises, a question of law arose certainly during the course of the proceedings. Such a question has been decided by the Umpire on a view which is a possible one to take. Even if there was no specific reference of a question of law referred to the Umpire, there was a question of law involved. Even on the assumption that such a view is not right, the award is not amenable to interference or correction by the courts of law as there is no proposition of law which could be said to be the basis of the award of the Umpire, and which is erroneous."
5. In Hind Builders v. Union of India, the Court cautioned that where two opinions were possible it could not be predicated that there was an error apparent on the face of the Award. In Bijendra Nath Srivastava v. Mayank Srivastava and Ors., the view was expressed that the reasonableness of reasons given by the arbitrator were not open to challenge and that the proper approach would be for the Court to support the Award. Similarly, in Hindustan Construction Co. Ltd. v. Governor of Orissa and Ors., it was repeated that the Court cannot reappreciate the material on the record. In Trustees of the Port of Madras v. Engineering Constructions Corporation Ltd., the decision of a Division Bench of the High Court of Madras, which reversed the Award on a question of fact and not a question of law, was set aside by the Supreme Court. After considering its previous decisions, the Apex Court in B.V. Radha Krishna v. Sponge Iron India Ltd., again held that the Court could not substitute its own view in place of that of the Arbitrator. In Army Welfare Housing Organisation v. Gautam Construction & Fisheries Ltd. the Court declined to vary an award for the reason that without reappreciating evidence it would not be possible to fault the quantum awarded towards anticipated expenses.
6. On the other hand, in Steel Authority of India Ltd. v. J.C. Budharaja, Government and Mining Contractor, , the Apex Court found the Award to be illegal as it was passed by the Arbitrator against the conditions agreed upon by the contracting parties and in conscious disregard of stipulations of the contract from which the Arbitrator derives his authority. The Apex Court also found fault with the Award since it granted claims which were palpably barred by limitation. The Courts interference with an Award would be expected and justified where the Arbitrator has travelled beyond the frontiers fixed by the contract between the parties. In Rajasthan State Mines & Minerals Ltd. v. Eastern Engineering Enterprises and Anr., , the Hon'ble Supreme Court exercised jurisdiction in context of the interpretation of two clauses in the subject contract since it held the opinion that their construction was 'absolutely clear and unambiguous'. The Court observed that in ignoring these clauses the Arbitrator had travelled beyond his jurisdiction since the Award was irreconcilable with those clauses.
7. On an analysis of the judgments of the Apex Court over decades, it will emerge that jural interventions with Awards is proscribed, rather than prescribed. Once it is appreciated that the Court's interference with an Arbitration Award while deciding Objections thereto is circumscribed by very narrow confines, it will be axiomatic that in a further appeal the scope of scrutiny by the Appellate Court/Division Bench is minuscule. The Appellate Court would only enter into the controversy when it appears inescapable that a firmly established principle of law has been infracted or ignored. The proceedings are analogous to a Second Appeal which is entertained only where a substantial question of law has arisen. The grounds of perversity would normally not be available since the Appellate Court's view of perversity cannot differ from the concurrent opinion of the Arbitrator and the Single Judge thereafter. Perversity is not calculated mathematically or empirically; it is a subjective assessment. When the vision of both the Arbitrator and the Learned Single Judge discloses normalcy, the Appellate Court cannot perceive perversity.
8. The Appellant had laid 14 Claims against the Respondents before the Arbitrator in connection with some construction works executed by it. The Award is dated 24.3.1984, against which the Appellant filed its Objections under Section 30 and 33 of the Arbitration Act. The Award was assailed before the learned Single Judge in respect of four Claims, viz. - No. 1 for Rs. 80,000/-, being the difference in market rate and stipulated rate of mild steel; No. 2 for Rs. 21,000/- being the difference in theoretical and actual weight of steel reinforcement; No. 3 for Rs. 2.45 lakhs in the nature of damages due to prolongation of contract; and No. 13 Interest at the rate of eighteen per cent per annum pendente lite and future. The Objections did not find favor with the learned Single Judge who has passed a decree in terms of the Award. Save for the claim for interest all other Claims have also been canvassed before us.
9. The learned Single Judge has opined that the Arbitrator had considered the relevant documents, including the correspondence exchanged between the parties (Ex R-1 to R-4) and after their perusal had rejected the contention that the mild steel contemplated in the Agreement did not cover steel doors. It is now too firmly established in arbitral jurisprudence that the Arbitrator is not expected to give a lucid and lengthy explanation to each of his findings, as he usually has a technical and not a legal background. The learned Single Judge therefore rightly held that the Arbitrator had indicated his rejection of the Claimant's argument. There was no scope of interference before the Court while disposing the objections on this issue and there is consequently certainly even less before us. This ground of appeal is without merit.
10. The manner in which the Learned Single Judge dealt with the next claim for Rs. 21,000/- manifests not only the correct approach to be adopted while deciding Objections to an Award, in that, despite appreciating the arguments of the Objector the Court declined to interfere in the award. The Contractor's submission was that if steel was issued by actual weighment it should also be accepted by this method and not by measurement. The Learned Single Judge however found that because of the correspondence exchanged between the parties 'an element of uncertainly' had been introduced by the Contractor. It was therefore concluded that the view of the Arbitrator could not be seen as a misconduct.
11. The findings of the Arbitrator on the remaining claims are entirely factual in nature and cannot be altered by the Court. The evidence, in the opinion of the Arbitrator indicated that there was no default on the part of the Respondents, and that sufficient and adequate evidence had not been laid for it. The Learned Single Judge rightly saw no room or reason to set aside the Award.
12. For these reasons we find no merit in the Appeal. It is dismissed. We desist from awarding costs.