Delhi District Court
M/S Chaudhary Motor Parivahan Sahkar ... vs Iffco on 29 August, 2024
IN THE COURT OF MS. PURVA SAREEN,
DISTRICT JUDGE-01, SOUTH, SAKET COURT,
NEW DELHI
Civil Suit No.85/2022.
DLST01-000307-2022
In the matter of:
M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd.,
Through its Authorised Representative
Sh. Vinod Chaudhary,
S/o Sh. Meva Lal,
R/o Village Chak Abdul,
Karim Alia Pure Bhulai,
Post Babuganj, Pragrana,
Sikandara, Tehsil-Phoolpur,
District-Prayagraj,
Also at New Delhi.
.... Plaintiff
VERSUS
Indian Farmers Fertilizers Co-operative Ltd.
IFFCO Sadan, C-1,
District Centre, Saket Place,
New Delhi-110017. Defendants.
Date of institution : 22.01.2022.
Date of final arguments : 09.07.2024.
Date of pronouncement of judgment : 29.08.2024.
CS No. 85/2022 Page No.1/39
M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative
Ltd.
JUDGMENT
Under Section 34 of the Arbitration & Conciliation Act.
1. The present petition under Section 34 of Arbitration & Conciliation Act 1996 (hereinafter referred as ' The Act') has been filed by the petitioner against the impugned order dated 08.03.2021 passed by learned Arbitrator in favour of the respondent rejecting all the claims of the petitioner herein. It is stated that the impugned award is completely contrary to the evidence on record and also does not consider the correct position of law.
2. As per the facts of the petition, the petitioner namely M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. is society duly registered under Section 4 of Uttar Pradesh Cooperative Society Act, 1985.
3. The respondent namely Indian Farmers Fertilizers Co-operative Ltd. (IFFCO) is a multi State Cooperative society engaged in the business of manufacturing and marketing of fertilizers.
4. The present dispute arose out of a contract that came into effect from 01.01.2012 and was extended mutually by both the parties till 2016. During the continuity of the contract, on 06.09.2012 the petitioner loaded 400 bags of Urea from IFFCO, Phulpur warehouse onto the petitioner's truck (owned by petitioner) bearing registration no.UP- 70BT-8968 (hereinafter to be referred as 'the truck') which was to be delivered to IFFCO/C/O F.S.C. Krishi Utpadan Mandi Samiti, CS No. 85/2022 Page No.2/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
Fatehpur warehouse (hereinafter to be referred as 'FSC Bindki'). The respondent also issued a material dispatch advice no.PH 12004323 through the truck for transport of 20 MT of packaged urea bags (400 bags of 50 KG each) to be delivered at FSC Bindki. The truck arrived on 07.09.2012 as FSC Bindki. The driver was informed by the Godown Incharge of the respondent at FSC Bindki that there was no space in the Godown for keeping 400 bags of urea and therefore asked the driver to unload the truck somewhere else. Hence, driver took the said consignment towards Fatehpur warehouse. On the way, truck's tyre got punctured and therefore the truck was parked at Mathura Road near Palesar Factor, while the same was being repaired. While patrolling in the said area, one Inspector Sh. Lallan Singh alongwith one constable Sh. Rajan Singh, PS Bindki District, Fatehpur came to the spot and enquired about the goods in the truck and reason for parking of truck. Driver informed the Inspector about the whole situation and about the goods in the truck and about reaching the destination. Despite obtaining all the relevant information, Inspector demanded illegal consideration for not taking any action. Driver of the truck refused to pay any illegal consideration, pursuant to which, the Inspector illegally impounded the truck and falsely registered an FIR bearing no.267/2012, under Sections 3 and 7 of the Essential Commodities Act, 1955. The respondent deducted a total amount of Rs.5,76,013/- against invoices 90-132 raised by the petitioner. The respondent further deducted Rs.2,01,263/- against invoices 133-141 taking the total deduction to Rs.7,77,276/-. Petitioner stated his impossibility to deliver the goods CS No. 85/2022 Page No.3/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
on account of impounding by the police and sent a letter dated 13.12.2012 to the respondent.
5. The petitioner further stated that his application for release of the truck was also dismissed by the DM Fatehpur and Ld. District & Sessions Judge, Fatehpur vide order dated 19.12.2012 and 12.03.2013 respectively.
6. On 13.04.2013, petitioner wrote a letter to respondent that he had completed the contract period for the work order and a sum of Rs.7,86,000/- had been deducted from the bills and that petitioner should be returned the bank guarantee furnished for the performance of the contract.
7. On 16.04.2014, in a miscellaneous writ petition the Hon'ble Allahabad High Court ordered the release of the truck of the petitioner and also directed disposal of urea bags consignment. The petitioner informed the respondent regarding the said order vide letters dated 25.04.2014 and 15.05.2014. The concerned urea bags, in compliance of orders of learned District Magistrate were released to M/s. Shaktiman Shiva Kendra, Fatehpur for sale and proceeds were to be deposited with the office of agricultural department. The petitioner preferred a writ petition before the Hon'ble Allahabad High Court seeking the money from the sale of 400 bags but the same was dismissed on 09.02.2015 with directions to the petitioner to invoke the arbitration clause provided in the agreement. Despite all CS No. 85/2022 Page No.4/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
efforts made by the petitioner the respondent had arbitrarily and illegally deducted Rs.8,50,000/- causing huge loss to the petitioner and respondent did not take any step to ensure that the proceeds from the sale of the seized urea bags were obtained by them to minimize the loss of the petitioner.
8. Moreover, as per the material dispatch advice issued by the respondent, the value of the consignment was Rs.1,09,480/- and as per clause 10.2 of the contract, the respondent was entitled to recover double the cost of material dispatch, hence, the respondent was entitled to an amount of Rs.2,18,960/- only. Despite this, the respondent without according any reasons, arbitrarily deducted Rs.8,50,000/- which was beyond the terms of the contract.
9. Hence, a petition was preferred before the Hon'ble High Court for appointment of an Arbitrator but the same was dismissed as withdrawn as no notice was issued to respondent for appointment of the Arbitrator.
10.During the pendency of the proceedings for appointment of an Arbitrator, the respondent illegally prevented the trucks of the petitioner from entering the Phulpur Plant by affixing an illegal direction on gate no.3 of its Phulpur Plant on 16.03.2016. The said direction was affixed on the main gate of respondent's factory stating that the petitioner's vehicles were not allowed to enter the premises of the respondent. Respondent had illegally and arbitrarily terminated CS No. 85/2022 Page No.5/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
the contract without any reason and without informing the petitioner. Such termination of the contract by the respondent without any prior notice, caused huge financial losses to the petitioner and also left him in a lurch.
11. The petitioner wrote a letter to the respondent on 23.05.2016 seeking reasons for such illegal termination but no reply was received. The contract was valid till end of December, 2016 but the respondent illegally terminated the same without informing the petitioner in retaliation to the arbitration proceedings. On 12.08.2016, the petitioner also preferred a writ petition against the respondent before the Hon'ble Allahabad High Court which was also dismissed as not maintainable. Meanwhile, it was brought to the notice of the petitioner that it had not informed the respondent regarding invocation of arbitration. Petitioner was made to withdraw the arbitration petition and the petitioner issued another notice to the respondent requesting for appointment of an Arbitrator in terms of the orders of the Hon'ble Allahabad High Court on 21.04.2017 and for invoking arbitration. The notice was sent on 24.04.2017 and received by the respondent on 26.04.2017. The respondent however did not send any communication to the petitioner. The petitioner thereafter preferred another application under Section 11 (4) of the Arbitration and Conciliation Act, which was dismissed for want of jurisdiction.
12. Petitioner once again issued a legal notice dated 16.11.2018 for CS No. 85/2022 Page No.6/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
appointment of Arbitrator in terms of clause 15 but no reply was received. Yet another letter dated 03.01.2019 was sent for appointment of an Arbitrator which was rejected by the respondent. Another letter was sent for appointment of Sole Arbitrator to which reply was sent and Sh. M M Sharma was appointed as a Sole Arbitrator. The Arbitrator issued a notice to both the parties and first sitting was conducted on 12.09.2019.
13. Learned Arbitrator passed the impugned award dated 18.03.2021 dismissing all the claims of the petitioner.
14.The petitioner filed the present petition under Section 34 of the Act stating that the learned Arbitrator did not consider the facts, matter and evidences on record. Hence, the present suit.
15. Respondent alleged that the petitioner was a black marketeer, illegally supplying urea and despite knowledge of the same, still the respondent continued to avail the services of the petitioner and kept extending the contract year after year.
16. Petitioner led oral evidence and was also cross-examined on limited aspects and despite opportunity, respondent did not cross-examine the petitioner on other aspects.
17. The petitioner stated that the learned Arbitrator as per the award, ordered a sum which is as per the petitioner an imaginary figure. No CS No. 85/2022 Page No.7/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
evidence was led by the respondent and hence the award should not have been allowed. The documents of the respondent were also not proved in terms of section 106 of Evidence Act. The petitioner was also not given opportunity for cross examining of the maker of the documents of the respondent. The learned Arbitrator relied upon the documents of the respondent in contravention to the settled principle of law and arbitrarily decided the claim against the petitioner.
18.The petitioner further stated that the petitioner was entitled to principle sum of Rs.5,00,000/- as respondent had never terminated the contract in terms of clause 17 of the contract. No notice was sent to the petitioner which is a clear breach by the respondent. It was submitted by the petitioner that the respondent committed repudiatory breach by illegally preventing the trucks of the petitioner to enter the Phul Pur plant because of which petitioner could not perform his obligation. The petitioner in his evidence dated 12.10.2020 testified that if the respondent would have not committed the breach, the petitioner would have made a profit of 20% of the leftover work, amounting to Rs.5,00,000/-. As respondent did not cross examine the petitioner on this aspect, the said statement was un-rebutted and hence proved.
19.The grounds taken by the petitioner for setting aside the award are (A) Award is patently illegal and implausible (B) Impugned award is perverse as it is contrary to the contract and there is misconduct on the part of sole arbitrator.
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(C) Award suffers from legal infirmities as there are errors on the face of record.
(D) There was a perceptible pre disposition on the part of the arbitrator to selectively dismiss the submissions and claims of the petitioner rather than putting efforts in evaluating the merits of the claim.
(E) The award fails to disclose under which provision of the contract agreement the claims have been decided.
(F) It has been observed by the arbitrator that there has been complete absence of due diligence and clear breach of good faith by the petitioner but he has failed to explain how he reached such a conclusion.
(G) Learned arbitrator failed to appreciate that the claims of the petitioners were well within the period of limitation. (H) The learned arbitrator failed to appreciate that as per clause 5 of the general terms of the order, all actions arising in connection with the contract had to be instituted before the court of competent jurisdiction in Allahabad.
(I) Learned arbitrator failed to appreciate the provisions of the contract and obligations of the respondent under the same. (J) As per section 73 and 74 of the Contract Act, a party complaining of breach can only succeed on showing proof of legal injury in the sense of some loss or damage having been sustained. (K) Learned Arbitrator failed to appreciate that respondent had illegally and arbitrarily and on his own violation deducted Rs.8,50,000/- instead of Rs.2,18,960/-. No explanation was sought by CS No. 85/2022 Page No.9/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
the arbitrator regarding the said deduction. Hence, the order should be set aside.
(L) As per law, an ambiguity should be interpreted in favour of the petitioner and against the respondent as the contract was drafted by the respondent.
(M) The respondent chose not to cross examine the petitioner on the aspect of profit of 20% amounting to Rs.5,00,000/- calculated by the petitioner. Hence, the averment of the petitioner stood unrebutted and not proved which the arbitrator failed to consider. (N) Learned arbitrator wrongly adjudicated the claim in the absence of any evidence showing actual costs incurred by the respondent due to which deduction was made. Hence, the deduction is imaginary and hypothetical. The documents of the respondent were also not proved. (O to Q) There has been non application of mind by the arbitrator and misconduct on his part. The preliminary objections of limitation which were agitated by the respondent at the belated stage should not have been addressed to.
20.Summons were issued to the respondent. Respondent made appearance before the court through counsel.
21.Meanwhile, counter affidavit was filed by the respondent stating that the petition is misconceived and without any valid basis under Section 34 of the Arbitration and Conciliation Act, 1996 to set-aside the award dated 08.03.2021 by the learned Arbitrator. The award is well reasoned and the learned Arbitrator has given sufficient and CS No. 85/2022 Page No.10/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
cogent reasons in support of the findings and conclusions as stated in the award. The contentions and grounds as raised by the petitioner in the present petition were the same before the learned Arbitrator and the said contentions and grounds were discussed and dealt with in the award and properly decided and determined by the learned Arbitrator.
22.It is further stated that the petitioner has failed to demonstrate any case of 'patent illegality' or how the award is opposed to public policy of India. There are very limited grounds prescribed under Section 34 (2) of the Act for challenging the award and petitioner has not made out any case to satisfy those grounds.
23.The present court cannot sit as a court of appeal over the decision of learned Arbitrator and examine the correctness of award on merits with reference to the material produced before the learned Arbitrator. When the arbitrator has applied his mind, the court shall not reappraise the matter as if it is sitting in appeal. The court also cannot test the quality of evidence and also if the claim of the parties is valid or justified under the contract, same has to be decided by the learned Arbitrator. It is also a settled law that when two views are possible, the one taken by the arbitrator shall prevail.
24. In the counter-affidavit, counsel for the respondent has referred to the landmark judgment of Hon'ble Supreme Court titled as Delhi Airport Metro Express Pvt. Ltd. v. DMRC, (2022) 1 SCC 131 wherein strict criteria has been laid down which has to be followed CS No. 85/2022 Page No.11/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
by the court while exercising jurisdiction under Section 34 of the Act. Ld. counsel has also referred to the judgment of NHAI v. M. Hakeem, (2021) 9 SCC 1, which further goes to say that the courts have no power to modify an order and the same principle has been laid down in the judgment titled MBL Infrastructure Ltd. v. Tele Communication Consultants of India, 2022 SCC Online DEL 4613.
25.In its parawise reply, the respondent while denying all the averments of the petitioner stated that the award was well reasoned in its findings and conclusion which specifically stated that the petitioner did not take the urea to the warehouse of the respondent but sought to steal the same by unloading it to a separate vehicle on an isolated road. The petitioner had to tender a written notice regarding the said eventuality within 48 hours as per clause 13.1 of the agreement but no such notice was given within prescribed time period.
26. Final arguments were addressed by both the parties and records were perused carefully. Written arguments were also filed by both the parties.
Arguments of Petitioner.
27.It has been argued by learned counsel for petitioner that the petitioner had entered into a contract with the respondent and on 06.09.2012, 400 begs of 50 kg each were dispatched in the truck of the petitioner. When the truck arrived at FSC Bindki, the godown Incharge refused CS No. 85/2022 Page No.12/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
to accept the consignment saying that they had no space. While the truck was parked at Mathura Road, it was impounded by the police and an FIR was registered. The release of the truck was sought from the DM, Fatehpur which was dismissed and appeal was also dismissed by learned District & Sessions Judge, Fatehpur. The Hon'ble High Court of Allahabad released the truck on 16.04.2014 and the District Agricultural Officer directed that the confiscated urea be sent to M/s Shaktiman Krishi Kendra for sale. The petitioner preferred a writ petition seeking the money of the sale of the said bags which was dismissed and the court gave liberty to the petitioner to initiate arbitration proceedings in order to recover money from IFFCO. Arbitrator was appointed on the application of the petitioner and on 17.03.2016 the respondent prevented the truck of the petitioner from entering Phulpur plant. It is submitted that the contract was illegally terminated by the respondent and petitioner preferred a writ petition. The petitioner was directed to withdraw the petition for appointment of arbitrator while granting liberty to proceed in accordance with law. Petitioner issued a notice to the respondent for appointment of arbitrator and on 14.05.2019 respondent appointed Sh. M. M. Sharma as Sole Arbitrator.
28.It is submitted that the appointment of Sole Arbitrator by the Sr. Executive Director of the company had rendered the order void ab initio, as the arbitrator was appointed without seeking consent of the petitioner and without filing a petition under section 11 of the Act.
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29.The learned counsel referred to the judgment of Hon'ble Supreme Court titled as TRF Ltd. v. Energo Engineering Projects Ltd., (2017) 8 SCC 377, wherein it was held that 'a person having interest in the dispute or in the out come or decision, is ineligible to appoint anyone else and such person should not have any role in charting out any course to the dispute resolution by having power to appoint an arbitrator. Learned counsel has also referred to the Bharat Broadband case wherein it was held that unilateral appointment of a sole arbitrator by a party or a authority having interest in a dispute would render the arbitrator unable to perform his functions. Similar observation was made in the Perkins Eastmen Architects DPC & Anr. v. HSCC India Ltd., (2020) 20 SCC 760 wherein it was held that "The reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party. But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the Arbitration Application No.32 of 2019 Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd. course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) and recognised by the decision of this Court in TRF Limited".
30.The Hon'ble Delhi High Court in Govind Singh v. Satya Group, 2023 CS No. 85/2022 Page No.14/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
SCC OnLine Del 37, held that the arbitral award rendered by a person who is ineligible to act as an Arbitrator cannot be considered as an arbitral award and the ineligibility goes to the root of his jurisdiction. The award is liable to be set-aside as being wholly without jurisdiction.
31. It was also held in Kotal Mahindra Bank Ltd. v. Narender Kumar Prajapat, 2023 SCC OnLine Del 3148 wherein it was held as under:
"This Court finds no infirmity with the aforesaid view. A person who is ineligible to act an Arbitrator, lacks the inherent jurisdiction to render an Arbitral Award under the A&C Act. It is trite law that a decision, by any authority, which lacks inherent jurisdiction to make such a decision, cannot be considered as valid. Thus, clearly, such an impugned award cannot be enforced".
32. Ld. counsel for the petitioner while referring to the judgment of Kiran Singh and Ors. v. Chaman Paswan and Ors. (1955) 1 SCR 117 observed that "It is a fundamental principle well established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings".
33.Ld. counsel for petitioner further referred to the judgment of Greater Mohali Area Development Authority v. Manju Jain, (2010) 9 SCC CS No. 85/2022 Page No.15/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
157, where the Hon'ble Supreme Court held that "It is settled legal proposition that pure question of law can be raised at any time of the proceedings but a question of fact which requires investigation and inquiry, and for which no factual foundation has been laid by a party before the Court or Tribunal below, cannot be allowed to be agitated in the Writ Petition. If the Writ court for some compelling circumstances desires to entertain a new factual plea the court must give due opportunity to the opposite party to controvert the same and adduce the evidence to substantiate its pleadings. Thus, it is not permissible for the High Court to consider a new case on facts or mixed question of fact and law which was not the case of the parties before the Court or Tribunal below".
34. The Hon'ble Delhi High Court in Smaaash Leisure Ltd. v. Ambience Commercial Developers Pvt. Ltd., 2023 SCC OnLine Del 8322 held a similar view as that of the judgment in Govind Singh v. Satya Group (supra) therefore the petitioner submitted that unilateral appointment of Arbitrator was a pure question of law and could be raised at any stage of the proceedings.
35. Ld. counsel for petitioner further stated that the sole Arbitrator wrongly rejected all the claims of the petitioner without considering that the claim qua the first contract arose only on 11.04.2017 and the notice invoking arbitration was issued on 21.09.2017 which was well within the limitation period. The petitioner was pursuing a legal remedy with due diligence and at no point of time the intent of the CS No. 85/2022 Page No.16/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
petitioner was malafide or or in bad faith. The onus intentionally pursuing an incorrect remedy cannot be placed on the petition as per Section 14 of the Limitation Act. A bare perusal of the contact (page 8 of additional documents) shows that the court of competent juridiction of Allahabad and the remedy pursued by the petitioner before the Allahabad High Court was in good faith and was neither meaningless nor pointless. Moreover, if the Arbitrator held that the suit was barred by limitation, it was precluded from adjudicating the matter on merits (Lalita Subba v. Sivester Rai and Ors, RSA 06 of 2019).
36. It has been categorically held in Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd. (2022) 1 SCC 131, that an arbitral award stating no reasons would make itself susceptible to challenge and it can be set-aside if the conclusions of the Abritrator are based on no evidence or have been arrived at by ignoring vital evidence. Award can be set-aside on the ground of patent illegality.
37. Counsel for the petitioner further submitted that the impugned award was against the fundamental policy of India as the Arbitrator had given a wrongful interpretation to the limitation applicable to the present case which went to the root of the matter.
38. Ld. counsel further argued that that Arbitral Tribunal is not independent and impartial as it was unilaterally appointed by the respondent without giving a choice to the petitioner. It was held in CS No. 85/2022 Page No.17/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
the landmark judgment of L & T Hydrocarbon Engineering Ltd. v. Indian Oil Corporation Ltd., 2022 SCC OnLIne Del 3587, that even an apprehension of bias of an Arbitrator in the minds of the parties would defeat the purpose of arbitration and such a situation must be avoided.
39. Hence, the present case is against the impugned award passed by a unilaterally appointed sole Arbitrator who not only dismissed all the claims of the petitioner on the ground of limitation but also held that they were untenable. Due to the incapacity of the sole Arbitrator, as per law, the impugned award was a nullity hence, it should be set- aside.
Arguments of Respondent
40. Ld. counsel for respondent also filed written submissions and addressed oral arguments. The main arguments of the respondent are
(i) petitioner's claims are time barred and (ii) challenge to appointment of the Arbitrator is belated and has been argued solely to destroy the sanctity of the proceedings.
41. Respondent submitted that the petitioner's claim was liable to be dismissed as they were not entitled to exclusion of time under Section 14 of the Limitation Act. As per Article 54 of the Limitation Act, the period prescribed for specific performance is three years. Clause 9.2 of the agreement provides for payment to be made within 30 days against fortnightly bills raised by the petitioner. Respondent made CS No. 85/2022 Page No.18/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
deduction on 29.11.2012 and the petitioner sought release of the deducted payment on 13.12.2012. On 22.01.2013 the final payment was cleared and on 06.04.2013 petitioner executed release of lien certificate. Assuming the best case even if the cause of action arose on 06.04.2013 the limitation expired on 06.04.2016 as per the respondent. Petitioner addressed the first notice invoking arbitration on 26.04.2017 more than 12 months after the prescribed period lapsed. Hence, the claim made by the petitioner was rightly dismissed being time barred.
42. It is also argued that the exclusion of time under Section 14 of the Limitation Act also does not apply in the present case as the petitioner does not fulfill the prerequisite of Section 14.
(a) When the Hon'ble Allahabad High Court directed the petitioner to invoke the arbitration clause on 09.02.2015, limitation had not expired and petitioner never took steps pursuant to the said order and is solely responsible for the delay in the present case.
(b) In disposing of the Arbitration & Conciliation Application, the Hon'ble High Court failed to serve the notice upon the respondent to appoint an Arbitrator. Hence, the claims were barred by limitation even on the date when they were first presented before the Arbitrator.
43. Ld. counsel for the respondent while referring to the judgment of Surya Chakra Power Corporation Ltd. v. Electricity Department, (2016) 16 SCC 152 discussed the requirements of Section 14 Limitation Act where good faith and diligence are CS No. 85/2022 Page No.19/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
disjunctive and must be separately fulfilled.
44. In Consolidated Engineering Enterprise v. Irrigation Department, (2008) 7 SCC 169, it was held that "Due diligence and caution are essentially pre-requisites for attracting Section 14. Due diligence cannot be measured by any absolute standards. Due diligence is a measure of prudence or activity expected from and ordinarily exercised by a reasonable and prudent person under the particular circumstances. The time during which a court holds up a case while it is discovering that it ought to have been presented in another court, must be excluded, as the delay of the court cannot affect the due diligence of the party. Section 14 requires that the prior proceeding should have been prosecuted in good faith and with due diligence. The definition of good faith as found in Section 2(h) of the Limitation Act would indicate that nothing shall be deemed to be in good faith which is not done with due care and attention. It is true that Section 14 will not help a party who is guilty of negligence, lapse or inaction. However, there can be no hard and fast rule as to what amounts to good faith. It is a matter to be decided on the facts of each case. It will, in almost every case be more or less a question of degree. The mere filing of an application in wrong court would not prima facie show want of good faith. There must be no pretended mistake intentionally made with a view to delaying the proceedings or harassing the opposite party. In the light of these principles, the question will have to be considered whether the appellant had prosecuted the matter in other courts with due diligence and in good CS No. 85/2022 Page No.20/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
faith".
45. In the present case, it is argued that there is clear negligence on the part of the petitioner as despite explicit suggestion by the Hon'ble High Court, the petitioner did not invoke arbitration. It even ignored the mandate of serving a notice upon the respondent. Further, it had ample information regarding the jurisdiction. The petitioner never pointed out and willingly prosecuted the proceedings which were non est or in the the alternative did not raise any objection on jurisdiction since there was no jurisdiction clause and hence no objection can be raised at this stage.
46. It is submitted that the award is well reasoned and laws have been properly applied to the facts.
47. Ld. counsel also argued that according to several judgments passed by the Hon'ble Supreme Court, mere erroneous application of law is not a ground to set-aside the award and even if the awards found faulty in its application or Limitation Act, it cannot be set aside. The jurisdiction of Section 34 of the Act cannot be invoked merely because of an adverse finding. The court under Section 34 of the Act is not a court in appeal and it cannot interfere with the award and re- appreciate evidence. This view was confirmed in the landmark cases of NHAI v. M. Hakeem and Konkan Railways Corporation v. Chenab Bridge undertaking Ltd., In Delhi Airport Metro Express Pvt. Ltd. v. DMRC, patent illegality was defined as an CS No. 85/2022 Page No.21/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
error that went to the root of the matter.
48. Ld. counsel for respondent argued that the challenge to the appointment of the Arbitrator was also not permissible as (i) it was not unilateral, (ii) petitioner waived the right to challenge the appointment and (iii) and the challenge was barred by constructive resjudicata.
49. Arguments have been heard and record has been perused.
50. The main argument and grievance of the petitioner is the unilateral appointment of the Arbitrator. Ld. counsel for the petitioner relied upon the judgment of TRF Ltd. v. Energo Engineering, which was confirmed in Perkins Eastmen Architacts v. HSCC India Ltd. to ensure the independence and impartiality of the Arbitrator.
51. Section 12(5) in The Arbitration And Conciliation Act, 1996 reads as under:
"(5)[ Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator".
52. The proviso to the above Section enables the parties to opt out of the bar by an express agreement in writing which is stated as under :-
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Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing.
53.In the present case the petitioner expressly opted out of the bar of Section 12(5) in The Arbitration And Conciliation Act by operation of clause 15 of the service agreement as per which, any dispute or difference could be settled by arbitration and there was no procedure contemplated for the appointment of the Arbitrator. The petitioner himself vide letter dated 14.05.2019 requested the respondent to appoint an Arbitrator. This fact has also been admitted by the petitioner in its petition under Section 34 of the Act. The letter sent by the petitioner to the respondent reads as follows:
4. "....In view of the same, kindly appoint an Arbitrator in terms of the aforementioned workorders for adjudication of disputes arisen between you and my client. Further, without prejudice my client reserves its rights to raise all the appropriate claims before the Arbitrator....".
54. Hence, the present case cannot be called as one of unilateral appointment as the authority was given to the respondent under the contract. Further, the petitioner accepted the name of the proposed Arbitrator without raising any objection either at the time of appointment or during the arbitral proceedings, which shows mutual agreement between the parties and waives the applicability of Section 12(5) of the Act.
CS No. 85/2022 Page No.23/39M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
55.In Gaurav Lohia Vs. Kotak Mahindra Prime Ltd. & Anr, it is stated that Hon'ble High Court of Delhi in Kanodia Infratech Ltd. Vs Dalmia Cement (Bharat) Ltd. OMP (Commercial), 297 of 2021 held that the appointment of arbitrator, if not challenged at an earlier stage, cannot be challenged u/s 34 of the Act on the ground that award is passed against the interest of one party.
56.Petitioner argued that the question of uniliteral appointment could be raised at any stage but this court has also noted that the petitioner himself waived his right to challenge the jurisdiction of arbitrator. It is a settled law that jurisdiction can only be challenged as per section 12(3) in two cases i.e. (i) Circumstances exists that give rise to justifiable grounds as to his independence and impartiality (ii) he does not posses the qualification agreed to by the parties, which means that if a party has doubt about the independence or impartiality of the arbitrator, it must approach the arbitrator through written communication within 15 days of his appointment as per section 13(2) and such a challenge must be raised by the party before the submissions of statement of defence. The act also empowers the arbitrator to decide questions pertaining to their own jurisdiction and if the arbitrator decides that the jurisdiction is well founded, he may proceed to render the award which later on can be challenged. It has been held by Hon'ble Supreme Court in Gas Authority of India Ltd Vs Keti Constructions (I) Ltd. that if plea of jurisdiction is not taken before the arbitrator in section 16 of the Act, such a plea cannot be CS No. 85/2022 Page No.24/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
permitted to be raised in proceedings u/s 34 for setting aside the award unless good reasons are shown. It was held in the landmark case of S. N. Malhotra Vs Airport Authority of India, 2008 SCC Online Del 442 that if a party does not challenge the jurisdiction until the submission of the statement of defence the right to raise this challenge is waived by implied conduct.
To conclude, although ordinarily, we would have been inclined to hold that in so far as jurisdictional issues are concerned, the contours of Section 34 are wide enough to enable the Court to consider such issues though not raised before the arbitrator, apart from other issues. But in the teeth of the statutory provisions mandating time limits for the setting up of such pleas [Section 16(2), 16(3), 16(4)] and in the teeth of Section 4 of the Act and in view of the law laid by the Supreme Court, jurisdictional objections, in our view, cannot be permitted to be raised at a later point of time, even under Section 34. To hold otherwise, would be to render otiose the provisions of Sub-sections (2) to (6) of Section 16 as well as Section 4 of the Act, and may even result in making a serious inroad into the provisions of Section 5 of the Act; which is aimed at cabining and confining judicial intervention in the arbitration process to the very minimum.
We, therefore, hold that the respondent must be deemed to have waived any objection to the jurisdiction of the arbitral tribunal when it chose not to raise the plea now being raised by it, though it was fully aware of the terms of the agreement entered into between the parties. Section 34(iv) cannot come to the rescue of the respondent as the said section cannot be read in isolation and allowed to render otiose the provisions of Sections 4, 5 and 16 of the Act which, in a sense, are the high points of the Act. Any other interpretation of the aforesaid provisions of the statute would not only deprive the winning party of the fruit of its hard earned labour at the end of a long drawn out battle, but, in our considered opinion, would be opposed to public policy,as it would inevitably result in colossal waste of time, money and energy, all of which are necessarily expended in the arbitral process. This apart, it would frustrate the object of the Act itself viz., to provide for expeditious disposal of a dispute by recourse to arbitration".
57.Hence, this court is of the opinion that the petitioner waived his right CS No. 85/2022 Page No.25/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
to raise a challenge to the jurisdiction of arbitral tribunal by participating in the arbitration without objecting to the appointment of the arbitrator till the filing of the statement of defence.
58.The learned counsel for the respondent has also being convincing with his arguments that the challenge is barred by constructive resjudicata as per which matters which are directly and substantially is issue in a form of proceedings between the parties, shall not be tried again. The petitioner ought to have raised substantive jurisdictional question at the very first instance but it remained a mute participant in the arbitral proceedings. Hence, he is barred from raising this issue at this stage.
59. The court also agrees with the argument that parties cannot travel beyond their pleadings u/s 34 and jurisdiction challenge cannot be invoked only to avoid an unfavourable award. The judgment referred to by learned counsel for respondent titled Arjun Mall Retain Holding Pvt Ltd. v. Gunocen Inc. passed by Hon'ble Delhi High Court categorically held as under :-
"32. It is observed that the respondent had sent several notices invoking the Arbitration clause, the first of which was a Notice dated 11.11.2017. Therefore, vide legal notice dated 02.08.2018, the respondent had informed the appellants in respect of invocation of the arbitration clause and appointment of the learned Sole Arbitrator. Therefore, the Tribunal entered into reference on 02.08.2018. When the matter come up for hearing before the learned Arbitrator on 31.10.2018 as well as on 24.11.2018, none appeared on behalf of the appellants. Relevantly, there is a time gap of almost eight months from the date of issuance of first legal notice of invocation of arbitration CS No. 85/2022 Page No.26/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
proceedings and its actual commencement. Yet, the appellants did not take any recourse to law for revocation of appointment of learned arbitrator or in challenge of the arbitration clause.
33. We find that under Section 34 of the Act, 1996 scope of interference by the Court is limited to the extent that the arbitral award is not vitiated on basis of pleadings raised by the parties. The learned District Judge has rightly observed that if a party fails to raise a plea in arbitral proceedings, it cannot take a fresh ground to seek relief before the Appellate Authority and may such plea, deserves to be rejected.
35. Instead of contesting the respondent's claim before the learned Arbitrator, the appellants remained mute spectator and only after losing the battle in arbitral proceedings, the appellants preferred appeal under Section 34 of the Act, challenging the appointment of Arbitrator as well as the Arbitral Award.
60.In the present case also, it is clear from the conduct of the petitioner that they participated in the arbitration proceedings without any objection and even after an adverse award petitioner did not press any jurisdiction challenge in the petition section 34 of the Act. The challenge was raised only during the final hearing only to escape the award and he has hence waived the right to challenge the jurisdiction of the arbitrator.
61.Learned counsel for the petitioner finally stated that there was patent illegality in the award and it was against the fundamental policy of India.
62.The court has come to the conclusion that the award is well reasoned and cogent. It does not suffer from patent illegality and neither is opposed to public policy. Section 34(2a) provides that mere erroneous application of law is not a ground to set it aside. The CS No. 85/2022 Page No.27/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
learned arbitrator has a final word on the contract as has been held in Indian Oil Corporation Vs Shree Ganesh Petrolium (2022) 4 SCC 463 and Atlanta Ltd Vs Inion of India (2022) 3 SCC 739.
63.It is a settled law that the award can only be set aside under section 34(2) in the following situation :-
The landmark judgment of ONGC Vs Saw Pipes and Delhi Airport Metro Express Pvt Ltd Vs DMRC Ltd (2022) 1 SCC 131 wherein it has been held that "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. Similarly has been held in Uttarakhand Purv Sainik Kalyan Nigam Limited. v.
Northern Coal Field Limited. 2, Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Another3 and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran4).
The amended Section 34 reads as under: -
"34. Application for setting aside arbitral award. -- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub- section (2) and sub- section (3).
(2) An arbitral award may be set aside by the Court only if
(a) the party making the application furnishes proof that
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the CS No. 85/2022 Page No.28/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1. --For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or CS No. 85/2022 Page No.29/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice. Explanation 2. --For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. (2-A) An arbitral award arising out of arbitration other than international commercial arbitration, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence."
64.In the present petition, the ground stated do not cover the specific ground laid down in section 34(2) under which an arbitral award can be set aside.
65.The court also relies upon the judgment of Hon'ble Supreme Court titled as SMCC-SCC-PVCC JV v. Rail Vikas Nigam Ltd., (2013) SCC Online Del 205 wherein it was held that "merely saying that an award is against public policy is not enough and the petitioner has to make a strong case within four corners of the provision".
66.Further, the scope of section 34 (2) was extremely limited and none of the grounds raised by the petitioner fall within the enumerated CS No. 85/2022 Page No.30/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
category. It has been so held in the judgment of PSA Sical Terminals (P) Vs Board of Trusties, (2021) SCC Online 508 and Indian Oil Corporation Vs Shri Ganesh Petroleum, (2002) 4 SCC
463.
67.Similar proposition has been held in the landmark judgment of Delhi Airport Metro Express Pvt Ltd Vs DMRC Ltd., (2022) 1 SCC 131 that "there is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the 28 endeavours made to preserve this object, which is minimal judicial interference with arbitral awards".
68.The landmark judgment of Ssanyong Engineering Vs NHAI (2019) 15 SCC 131 states that "construction of the terms of contract is primarily for an arbitrator to decide i.e. Arbitrator makes his decision in such a manner that no fair minded or reasonable person would and the arbitrator view is not even a possible view to take.
69.It has been held in judgment of NHAI Vs M. Hakeem that the court cannot act as an appellate court to examine the legality of an award. Section 34 provides only for setting aside awards on limited grounds CS No. 85/2022 Page No.31/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
and such grounds are contained in sub section 2 and 3 of Section 34. The court even examines the merits of claim by entering in factual arena or re-appreciate evidence merely because arbitaral tribunal has made errors when dealing with it. It was also held in the above mentioned judgments cumulatively that contravention of substantive law cannot be a ground to set aside an arbitral award.
70.In the same judgment Hon'ble Supreme Court has held that "what is important to note is that, far from Section 34 being in the nature of an appellate provision, it provides only for setting aside awards on very limited grounds, such grounds being contained in sub-sections (2) and (3) of Section 34. Secondly, as the marginal note of Section 34 indicates, "recourse" to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-sections (2) and (3)".
71.It is settled law that a Section 34 proceeding does not contain any challenge on the merits of the award. This has been decided in MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163, at 167 as follows:
"As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court CS No. 85/2022 Page No.32/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings".
72.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 co- terminus with the 'limited right', namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 the Arbitration Act, 1996.
73.It has been held by Hon'ble Supreme Court in case titled Dyna Technologies Pvt Limited Vs Crompton Greaves Limited (2019) 20 Supreme Court Cases 1 that "the mandate under section 31(3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the Courts from a fair reading of the award the documents referred to CS No. 85/2022 Page No.33/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
thereunder, if the need be". "When we consider the requirement of a reasoned order, three characteristics of a reasoned order can be fathomed. They are : proper, intelligible and adequate. If the reasoning in the order are improper, they reveal a flaw in the decision making process. If the challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the Arbitration Act. If the challenge to an award is based on the ground that the same is unintelligible, the same would be equivalent of providing no reasons at all. Coming to the last aspect concerning the challenge on adequacy of reasons, the Court while exercising jurisdiction under section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue.
74.It has been further held in Ircon International Ltd Vs Afcons Infrastructure Ltd by Hon'ble Delhi High Court in OMP (Commercial) 279/2019 that the scope of examination under Section 34(2-A) of the A&C Act is limited. This Court is not required to revaluate and reappreciate the evidence and supplant its opinion over that of the Arbitral Tribunal. Unless the decision is found to be patently illegal, no interference with the Arbitral Award is called for. In Delhi Airport Metro Express (P) Ltd. v. Delhi Metro Rail Corpn. Ltd. [Delhi Airport Metro Express (P) Ltd . v. Delhi Metro CS No. 85/2022 Page No.34/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
Rail Corpn. Ltd., (2022) 1 SCC 131 : (2022) 1 SCC (Civ) 330] , Supreme Court had authoritatively explained that even an erroneous view would Signature Not Verified Digitally Signed By:DAMINI YADAV Signing Date:26.04.2023 19:14:42 NEUTRAL CITATION NO. 2023:DHC:2816 not vitiate the Arbitral award on the ground of patently illegality unless the error is manifest and one that strikes at the root of the matter. It is trite law that an Arbitral Tribunal is a final adjudicator of the evidence and its conclusion cannot be interfered with except where it is found to be patently illegal or in conflict with the public policy of India. In Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1] , the Supreme Court had held that courts would not interfere merely because an alternative view on facts exists. Similarly, in Associate Builders v. DDA [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , the Supreme Court had observed that "a possible view by the Arbitrator on facts has necessarily to pass muster as the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his Arbitral award"."
75.In view of the aforementioned judgment, it is evident that the Arbitrator, being the ultimate master of the Arbitration, can adjudicate the claims in a manner that is on the lines of basic tenants of Law and the Principles of Natural Justice and Jurisprudence. As long as the Award does not shock the conscience of the Court, it warrants no interference of the Court.
CS No. 85/2022 Page No.35/39M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
76.The law which has been settled by the Hon‟ble Supreme Court is that the scope of interference with an Arbitral Award under Section 34 of the Act, 1996 is fairly limited and narrow. The Courts shall not sit in an appeal while adjudicating a challenge to an Award which is passed by an Arbitrator, the master of evidence, after due consideration of facts, circumstances, evidence, and material before him.
77.This Court has also taken assistance from the judgment of Fiza Developers and Inter Trade Pvt. Ltd. Vs. AMCI (India) Pvt. Ltd., and Ors (2009) 17 SCC 796, wherein it was held that the petitioner cannot call for intervention of the Hon'ble Court in the merits and factual aspects of the dispute which have been exhaustedly examined by the Arbitrator consequent to which the Arbitrator had given conclusive, fair and reasonable findings in favour of the respondent. It was further held that "the scope of inquiry in a proceedings u/s. 34 is restricted to consideration where any of the grounds mentioned in section 34 (2) exist for setting aside the judgment. The grounds for setting aside the award are specific. Section 34(2) also clearly places the burden of proof on the person who make the application".
78.The similar view has also been laid down by the Honble High Court of Delhi in Ravi Builders Vs. Union of India, in OMP No.308/2009, decided on 03.11.2009. It is absolutely clear that this CS No. 85/2022 Page No.36/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
Hon'ble Court cannot sit over the award and examine it as an Appellate court and whether this court would desist itself from substituting its opinion, if at all it has a difference one, over the reasoning of the Arbitrator.
79.In the case of M/s Woodfun Vs. National Thermal Power Corporation Ltd- in OMP No. 257/2009 - decided on 25.8.2009, the Hon'ble High Court of Delhi has observed that - "3. It is settled law that while considering objections under Section 34 of the Arbitration & Conciliation Act, 1996 the Court does not act as a Court of Appeal and cannot rewrite an award after re-appreciating the evidence produced before the Arbitrator. The Arbitrator is appointed by the consent of the parties. He is a judge chose by the parties, his decision is final and binding on the parties and the award can be set aside only if the petitioner is able to make out a case under Section 34 of the Arbitration and Conciliation Act 1996 which read as under : " 34 Application for setting aside arbitral award (1) Recourse to a court against an arbitral award may be made only by an application for settling aside such award in accordance with sub section (2) and sub section (3) ............." "4. The Arbitrator is a sole judge of the quantity and quality of the evidence and whether a fact has been proved or not proved. This court cannot look into the evidence produced before the learned Arbitrtor in order to arrive at a conclusion whether the evidence was sufficient / insufficient, relevant / irrelevant , properly appreciated / not appreciated. The petitioner has failed to make out a case under CS No. 85/2022 Page No.37/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
any of the grounds as stated under section 34 of the Arbitration and Conciliation Act 1996."
80. In the case of K. V. Mohammed Zakir Vs. Regional Sports Centre (2009) 9 SCC 357, it was held ; "5. We are of the view that the settled position in law is that the court should not substitute its own view for the view taken by the arbitrator while dealing with the proceedings for setting aside an award. 6. It is equally well settled, where the arbitrator acts within jurisdiction, " the reasonableness of the reasons" given by the arbitrator is not open to scrutiny by courts ....". the similar view was also laid down by the Hon'ble High Court of Delhi in K.C.Sharma Vs. Delhi Development Authority 131 (2006) DLT 466.
81.The grounds raised by the petitioner do not disclose as to how the award is perverse or against public policy. The reasoning given by the Ld. Arbitrator while deciding each claim cannot be faulted as he has declined the claims of the claimant were not made out. In case the evidence led by the parties was not discerned by the Ld. Arbitrator, he would have out-rightly allowed all the claims of the claimant but that is not the case.
82.It has been held in various judgments that in case in two views are available and one adopted by the Ld. Arbitrator the same cannot be reversed only because the court prefers the other view. It is once again reiterated for the sake of repetition that the award given by the CS No. 85/2022 Page No.38/39 M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.
Arbitrator is a reasoned award drawn after discerning the entire evidence led by both the parties.
83.In view of the aforesaid discussions, none of the grounds raised by the petitioner qualify the conditions mentioned in the sub clause (ii) of Section 34 of the Arbitration & Conciliation Act, 1996, for which the award of learned Arbitrator can be interfered with. Since none of the conditions are satisfied, accordingly, objections raised by the petitioner through this petition under Section 34 of the Arbitration & Conciliation Act 1996, stand dismissed. Hence, the present petition also stands dismissed. File be consigned to record room after due compliance. Digitally signed by PURVA Announced in open court PURVA SAREEN SAREEN Date:
On 29th August , 2024. (Purva Sareen) 2024.09.04 20:10:31 District Judge-01, South, +0530 Saket District Courts, New Delhi.CS No. 85/2022 Page No.39/39
M/s. Chaudhary Motor Parivahan Sahkar Samiti Ltd. v. Indian Farmers Fertilizers Co-operative Ltd.