Saktipada Dey v. Union of India — 1978 DIGILAW 654 (CAL)

ORDER The subject matter of challenge in this application under the Arbitration Act, 1940, is an award dated 18th April, 1977. In order to appreciate the challenge it would be necessary to refer to certain facts. It appears that the petitioner, as contractor had certain claims against the respondent. These claims were on different heads and details of these claims were tabulated in the statement of claim. The total amount claimed amounted to about Rs. 1,40,000/-. of this item no.1 of the claim was for Rs. 36,800/- which was earnest money. The respondent, Railway authorities submitted a rejoinder or a reply to the Statement of claim filed on behalf of the claimant, the petitioner herein. In the said reply, the Union of India had set out its own comments in respect of each head of items of claim made by the petitioner. It was thereafter stated in the said reply as follows: "It is therefore submitted that the learned Arbitrator will be pleased to reject all the claims of the claimant and award in favour of the respondent, South Eastern Railway, a sum of Rs. 37,816,55. Out of which a sum of Rs. 36,800/- has already been recovered as stated in the foregoing and the balance is still due, the respondent also prays for award of cost." 2. The counter claims of the Railways were on account of the alleged extra cost for loading of ballast, departmental charges for supervision and to per cent penalty for not effecting the supply within the stipulated time. In the annexure to the reply dealing with the comments and the details of the claim of Rs, 94,429, leaving aside the other claims, the Union of India had, so far as the earnest money was concerned, stated as follows : “Yes. Available with Railway and withheld for the claimant's failure to supply and loading of ballast contracted for." 3. Upon this, the arbitrator being the Engineer-in-chief (Survey), South Eastern Railway, Tatanagar made an award on the 18th April, 1977. In the said award, he held, inter alia, as follows: "1. That the Respondents i.e. the President of India acting through the General Manager, South Eastern Railway, Garden Reach, Calcutta-43 shall pay to the claimants a sum of Rs. 9,952/- (Rupees Nine thousand nine hundred fifty two only) in full and final settlement of all claims; 2. In the said award, he held, inter alia, as follows: "1. That the Respondents i.e. the President of India acting through the General Manager, South Eastern Railway, Garden Reach, Calcutta-43 shall pay to the claimants a sum of Rs. 9,952/- (Rupees Nine thousand nine hundred fifty two only) in full and final settlement of all claims; 2. That all the counter-claims of the Respondents stand rejected, 3. That the claimants shall pay to the Arbitrator, a sum of Rs. 20/(Rupees Twenty only) towards the cost of stamped paper used for making this Award: 4. That the parties shall bear their own costs." 4. The petitioner thereupon challenged the said award in this Court and on the 21st April, 1978 I had made an order remitting the award in terms of prayer (b) of the petition of the petitioner which was to the following effect because it was not clear whether the Arbitrator had dealt with the claim of refund of the security deposit: ''(b) In the alternative, the said award dated 18th April, 1977 be remitted to the said Arbitrator, Sri Seshagiri Rao, Engineer-in-chief (Survey), South Eastern Railway, Tatanagar for reconsideration and/or clarification and/or determination of the amount refundable and payable by the respondent to your petitioner in respect of earnest money and security deposits if the Court thinks fit and proper in the circumstances of the case and the said arbitrator be directed to submit his decision to this Hon'ble Court within such time as to this Hon'ole Court may seem fit and proper. 5. After remission, the arbitrator has made the second award which is the subject matter of challenge before me. After setting out the claimant's claims as they originally stood and the respondent counter claim of Rs. 37,816/the arbitrator has a warded as follows: "The relevant items of my award are as follows: i) The respondents shall pay to the claimants a sum of Rs. 9,952/- in full and filial settlement of all claims. ii) All the counter claims of the Respondents stand rejected. The earnest money and the security deposit were not an item of counter claims of the respondents. Only two counter claims as below were made and stand rejected by the arbitrator viz : (a) extra cost incurred for loading ballast by departmental labour. Rs. 25,847.59 (b) 10% penalty for failure in supplying 2,78,348 cft. of ballast out of 8 lakhs cft. Only two counter claims as below were made and stand rejected by the arbitrator viz : (a) extra cost incurred for loading ballast by departmental labour. Rs. 25,847.59 (b) 10% penalty for failure in supplying 2,78,348 cft. of ballast out of 8 lakhs cft. of ballast as per agreement. Rs. 11,968.96 The earnest money and security deposit were included in the claims made by the claimant. This fact was taken into account by me while calculating the sum of Rs. 9,952/- awarded to the claimant. I would state that all items from (a) to (i) referred to ill para 3.4 were taken into consideration by me-while deciding upon the amount of award." 6. This award is being challenged, before me, on the ground that it is perverse. It was urged that the claim for refund of Rs. 36,800/- which was admittedly with the respondent had not been denied or disputed had not been dealt with in the award. Emphasis was laid on the expression all counter claims of the respondents stand rejected'. It was argued that if all the counter claims of the respondent, viz. Railways had stood rejected then when the deposit of the earnest money made on behalf of the petitioner had been admitted by the Railways then the award for Rs.9,952 towards the claims of the claimant was a perverse award because it had denied the petitioner the refund or return of the earnest money which admittedly had been deposited with the respondent, Railways. 7. The jurisdiction of the Court to set aside an award on ground of perversity is a very limited one and, in my opinion, must be exercised with caution. But in an appropriate case, when perversity is apparent on the face of the record, such au award is liable: to be set aside by the Court in an appropriate application. In the case of Chhogmal Rowatmal v. S. G. Shah, 53 CWN 828, the Division Bench of this Court had an occasion to deal with such a situation. The Division Bench observed that ordinarily the Court would not review the arbitrators' conclusion or findings provided they acted within authority and according to the principles of justice and behave fairly to both parties. The Division Bench observed that ordinarily the Court would not review the arbitrators' conclusion or findings provided they acted within authority and according to the principles of justice and behave fairly to both parties. The discretionary power of the arbitrators in the conduct of proceedings was never absolute and their decision would have to be reviewed by the Court and their award set aside if It bad appeared that in the course they had pursued they had acted in a manner in which no person vested with judicial authority could possibly act. Accordingly where there had been mishandling of the arbitration proceedings serious neglect of duties on the part of persons vested with judicial authority to determine the rights and liabilities of the parties which was likely to lead to substantial miscarriage of justice, the 'Court was justified in setting aside the award. In that case, the Court held where the arbitrator had come to a finding on the extension of due dates under the contract before them without taking evidence or award the damages at a rate higher than that fixed by law, he was guilty of legal misconduct and therefore the award should be set aside. As I have mentioned before and as would be apparent the facts of that case were entirely different. In that case, with which the Division Bench was concerned, there was certain procedural irregularity and without any evidence of extension of due date there could not have been an award of the amount awarded. Therefore, the amount awarded could be inferred to have been awarded without any evidence at all. These facts could be demonstrated from the award and the proceedings annexed to the award. In the instant case, however, it is necessary to bear in mind the distinction between the counter claim and set off. Counter claim in law normally is a claim which a party defendant or opponent claims in excess of the claim of the suitor. Set off is a right different from the right to counter claim. Set off is a right to adjust the claims of the suitor or the claimant against certain rights or dues of the claimant. This principle is well settled and reliance in this connection may be placed on the observation of the Division Bench of this Court in the case of Harendra Nath v. Surendra Nath. Set off is a right to adjust the claims of the suitor or the claimant against certain rights or dues of the claimant. This principle is well settled and reliance in this connection may be placed on the observation of the Division Bench of this Court in the case of Harendra Nath v. Surendra Nath. AIR 1942 Cal 559 It is true that in the instant case the arbitrator had used the expression that all counter claims of the respondent stood rejected. But the arbitrator had made it quite clear that the earnest money and security deposit were not items of counter claim of respondents and the earnest money and security deposit were included in the claim of the claimant and he awarded the claim of the claimant by giving the claimant a sum of Rs, 9.952/- The arbitrator had taken into account the right of set off and the earnest money to the extent of Rs. 36,800/- which is apparent from the award of the arbitrator. 8. In this case there was no allegation of any procedural irregularity by the arbitrator in the sense of his following a procedure which was not in consonance with the principles of natural justice which a quasi-judicial authority like arbitrator is hound to follow. 9. In that view of the matter, I am unable to accept the contention that the award on the fact of it indicates such a pervesity which can be interfered by this Court as an arror apparent on the face of the award. If, that is the position, then this application fails and is accordingly dismissed. 10. In the facts and circumstances of this case, however, there will be no order as to costs. 11. Stay of this order is granted till one week after X'mas vacation. Application rejected.