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1979 DIGILAW 225 (DEL)

INDIA HARD METALS LIMITED v. UNION OF INDIA

1979-10-31

SULTAN SINGH

body1979
SULTAN SINGH ( 1 ) THE petitioner M/s. India Hard Metals Limited entered into a contract with the Union of India tor the supply of 36,000 numbers of Tungsten Carbide Core and 41,000 numbers of Finished Machine Nose as per acceptance of Tender dated 31st January, 1969. The deliveries were to be made from January 1969 to January, 1972. Disputes arose between the parties. The Director General of Supplies and Disposals, New Delhi, vide letter dated 15th March, 1977 8th June, 1977, appointed Dr. Bakshish Singh, Additional Legal Adviser to the Government of India in the Ministry of Law. as sole Arbitrator to determine the disputes. The parties submitted claim and counter-claim before the arbitrator and also filed documents. The arbitrator on 26th October, 1978 made the award which is reproduced below: "in the matter of Arbitration Act, 1940 (X of 1940) and In the matter of arbitration between Union of India (DGS and D) New Delhi and M/s. India Hard Metals Ltd. , 49/1, Gariahat Road, Calcutta- 700 019, Contractor. Re: A/t No. SCA-1/ 107/9/251/521/69/pacc/660, dated 31-1-1969, Case No. 147-B/77. AWARD made this 26th day of Oct. 1978. WHEREAS I, Dr. Bakhshish Singh, Additional Legal Adviser to the Govt. of India, Ministry of Law, Justice and C. A. , New Delhi was appointed as Sole Arbitrator by the Director General of Supplies and Disposals, New Delhi vide letter No. Lit. II/a (34)/77/vi dated 15-3-77/8-6-77, under the terms and conditions agreed to by the parties with reference to A/t mentioned above and the difference between them relating to the said A/t were referred to my arbitration. AND WHEREAS I took upon myself the burden of said Reference and heard the parties and considered in detail the documentary and oral evidence produced before me and heard the counsel for the parties (Shri J. L. Nain, Sr. Advocate with Shri K. R. Sampat, Advocate for contractor and Shri D. B, Kulkarni, Advocate tor the U. 0. I.) and I do hereby make my award and publish as stated below: (a) That claim of M/s. India Hard Metals Ltd. , is allowed for Rs. 11,10,746. 00 (Rs. Eleven Lakhs, ten thousand, seven hundred and forty six only) against the Union of India. (b) That all other claims of the parties are rejected and the parties shall bear their respective costs of these proceedings. 11,10,746. 00 (Rs. Eleven Lakhs, ten thousand, seven hundred and forty six only) against the Union of India. (b) That all other claims of the parties are rejected and the parties shall bear their respective costs of these proceedings. (c) That the Union of India shall pay the amount within 3 (i. e. three) months of award, failing which Rs. 3% per annum interest till the date of payment or the date when this award is made rule of the court, whichever occurs earlier. In witness whereof I have signed and , made this award at New Delhi on this the 26th day of October, 1978. Sd/ Bakhshish Singh ; 26-10-1978 Arbitrator"the petitioner filed a petition under Sections 14 and 17 of the Arbitration Act for filing of the award and proceedings in court and for making the same a rule of the court with a further prayer for grant of interest from the date of decree till payment. The arbitrator filed the award and the proceedings in court. Notice of the filing of the award was served upon the parties and the Union of India respondent filed objections, (I. A. No. 705 of 1979) to the award. The respondent alleges that the petitioner contractor did not produce the bill of entries before the respondent for finalisation of prices though it was obliged to do so as per terms of the contract, that a notice for the production of bills of entries to the petitioner was also issued on 17th July, 1978, during the pendency of the arbitration proceedings but the petitioner failed to do so. The respondent further alleges that it got the record rerroduced from the Collector of Customs Calcutta to show that the petitioner paid 10% custom duty and not 60% custom duty, that the arbitrator has misconducted himself and the proceedings by rejecting the claim of the Union of India and partly accepting the claim of the petitioner, that the award suffers from errors of law apparent on its face, that the claim of the Union of India for the general damages was rejected without any cogent reason and ground, that the award in favour of the petitioner is based on conjectures and surmises and without any evidence in support of the petitioner s claim. The petitioner in reply submits that notice dated 17th July, 1978, was received by it from the respondent for the production of certain records and the required record was produced before the arbitrator and when O. P Gupta, Secretary of the petitioner-company appeared as a witness the entire record was shown to the arbitrator and the petitioner was prepared to show the same to the counsel for the Union of India before the arbitrator on all dates of hearing after 17th July, 1978. The petitioner pleads that the allegation of the respondent-Union of India that the record was not produced by it is false The petitioner further alleges that record from the Collector of Customs, Calcutta was also got produced by the respondent before the arbitrator. The petitioner further states that there were two rival contentions before the-arbitrator with regard to true construction of the price adjustment clause and the arbitrator had the jurisdiction to accept one of the constructions and has apparently doen so that the arbitrator has. considered the entire record including the record produced by respondent No. 1 and it is after consideration of the entire record and the rival contentions of the parties that the arbitrator made his award in favour of the petitioner. It is denied that the arbitrator misconducted himself or the proceedings or that there is any error of law apparent on the face of the award. The petitioner prays that the objections be dismissed and award be made a rule of the court. ( 2 ) FROM the statement of O. P. Gupta recorded before the arbitrator it is clear that the documents required by the Union of India as per notice dated 17th July, 1978, were produced before him and that the same record was got produced by the respondent from the Collector of Customs, Calcutta. After the production of the record and recording of the evidence by the arbitrator, the arbitrator gave his award. The assertion of the respondent that record was not produced in spite of notice dated 17th July, 1978, is, therefore, held to be incorrect. ( 3 ) IT is now well settled that an award made by an arbitrator is final as a judgment between the parties and is not liable to be set aside on the ground that it is erroneous in fact or in law. ( 3 ) IT is now well settled that an award made by an arbitrator is final as a judgment between the parties and is not liable to be set aside on the ground that it is erroneous in fact or in law. It cannot be set aside on any ground other than those mentioned in Sec. 30, of the Arbitration Act. Section 30 of the Arbitration Act is as under "section 30: 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 the arbitration proceedings have become invalid under Section 35: (c) that an award has been improperly procured or is otherwise invalid. " An award may be set aside by the court on ground of error of law on the face of the award, but it cannot be set aside merely because by process of inference, it may be pointed out that the arbitrator has committed some mistakes in arriving at his conclusion. ( 4 ) IN Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. , AIR 1923 PC 66, it has been observed as under "the law on the subject has never been more clerly stated than by Williams J. in the case of Hodgkinson v. Fornie (1857) 3 C. B. (N. S.) 189". "the law has for many years bech settled, and remains so at this day, that where a cause or matters in difference are referred to an arbitrator, a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact. . . . . . . . . . . . The only exception to that rule are cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is now, I think firmly established viz. , where the question of law necessarily arises on the face of the award or upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted, I think it may be considered as established". , where the question of law necessarily arises on the face of the award or upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted, I think it may be considered as established". Further it has been observed in this judgment as follows: "now the regret expressed by Williams, J. , in Hodgkinson (supra) has been repeated by more than one learned Judge, and it is certainly not to be desired that the exception should be in any way extended. An error in law on the face of the award means, in their Lordships view, that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment some legal proposition which is the basis of the award and which you can then say is erroneous. It does not mean that if in a narrative a reference is made to a contention of one party that opens the door to seeing first what that contention is, and then going to the contract on which the parties rights depend to see if that contention is sound". The Supreme Court in Union of India v. A. L. Rallia Ram. AIR 1963 SC 1685 , Union of India v. Bungo Steel Furniture Pvt. Ltd. , AIR 1967 SC 1032 , M/s. Allen Berry and Co. Pvt. Ltd. , v. Union of India, AIR 1971 SC 696 and N. Chellapan v. Secy. Kerala State Electricity Board, AIR 1975 SC 230 , has also laid down the same principles for setting aside the award. In Jeevan Industries (P) Ltd. , v. Haji Bashiruddin Madhusudan Dayal, AIR 1975 Delhi 215, the Division Bench of this court has held that it was not open to the court to speculate where no reasons have been given by the arbitrator as to what impelled him to arrive at his conclusion and on the assumption that the arbitrator must have arrived at his conclusion by a certain process ot reasoning the court cannot proceed to determine whether the conclusion was right or wrong and the court cannot attempt to probe the mental process, by which the arbitrator has reached his conclusion when it was not disclosed by the terms of his award. ( 5 ) THE award of the arbitrator in this case does not discuss any question of fact or any question of law. No error of law has been pointed out on the face of the award. No act of misconduct on the part of the arbitrator during the course of the proceedings has been brought to my notice. The learned counsel for the Union of India argued that the petitioner did not produce the documents required by the Union of India but this allegation as stated above is incorrect. A notice to produce documents was served upon the petitioner company and Mr. O. P. Gupta on behalf of the petitioner-company appeared as a witness when all the documents required by the Union of India were produced before the Arbitrator. Moreover all such documents were also got produced by the Union of India from Collector of Customs, Calcutta. Thus it would be seen that the entire record which was required by the Union of India before the arbitrator for its true decision was available to the arbitrator at the time of hearing. The arbitrator, after hearing the parties and considering the documentary and oral evidence produced before him gave the award. The award does not give any reason. It is. therefore, not possible for me to find out what impelled the arbitrator to determine the amount payable to the petitioner. The arbitrator has allowed Rs. 11,10,746. 00 to the petitioner-company M/s. India Hard Metals Ltd. , against the Union of India and has rejected all other claims of the parties. The arbitrator has further granted interest (a) 3 per cent per annum to the petitioner in case the amount was not paid within three months of the award. I see no ground to interfere with the award. There is no merit in the objections filed by the Union of India and therefore the petition (I. A. No. 705 of 1979) is dismissed. ( 6 ) UNDER the circumstances the award dated 26th October, 1978, of Dr. Bakshish Singh, Sole Arbitrator in case No. 147-B of 1977, is made a rule of the court. The petitioner is accordingly granted a decree for Rs. 11,10,746. 00 with interest @ 3 per cent per annum from the date of the award till the date of decree and future interest @ 9 per cent per annum from the date of decree till payment. The petitioner is accordingly granted a decree for Rs. 11,10,746. 00 with interest @ 3 per cent per annum from the date of the award till the date of decree and future interest @ 9 per cent per annum from the date of decree till payment. The petitioner shall also be entitled to costs of these proceedings. Counsel tee Rs. 400. 00.