Research › Browse › Judgment

Delhi High Court · body

1987 DIGILAW 221 (DEL)

SALWAN FURNISHING COMPANY v. DELHI DEVELOPMENT AUTHORITY

1987-05-18

MAHESH CHANDRA

body1987
Mahesh Chandra ( 1 ) THIS, judgment will dispose of Suit No. 829-A/85 filed under Sections 14 and 17 of the Arbitration Act and I. A. 5944/85 which are objections filed under Sections 30 and 33 of the Arbitration Act, by the respondent-Delhi Development Authority. ( 2 ) THE facts giving rise to this order are that the petitioner-M/s. Salwan Furnishing Company had filed this suit against respondent No. 1 Delhi. Development Authority and respondent No. 2-Arbitrator on the allegation that the petitioner and respondent No. 1 had entered into agreement No. 3 PE/agds/agvc/dda/82-83 in respect of supply of goods by the petitioner to respondent No. 1 and the said agreement contained arbitration clause as well; that inasmuch as disputes and differences arose between the petitioner and respondent No. 1, the same were referred to the sole arbitration of respondent No. 2, that respondent No. 2 has made his award on 26th April, 1985; that respondent No. 2 should be directed to file his award and the same be made a rule of court and respondent No. 1 should also be directed to pay interest pendents life and future at the rate of 18% per annum on the awarded amount and the decree be passed accordingly. ( 3 ) A notice of this suit was sent to respondent No. 2 and in consequence award dated 26th April, 1985 as also arbitration proceedings were filed by the arbitrator. Notice of the filing of the award was issued to the parties. Notice of the filing of the award was accepted by the learned counsel for the petitioner on 17th July, 1985 while it was served upon respondent No. 1 on 26th July, 1985 and in consequence objections now registered as I. A. 5944/85 were filed by respondent No. 1 on 22nd August, 1985. The reply to the objections has been filed by the petitioner and the objections are being contested. In consequence of these objections, following issues were framed vide orders dated 28th February, 1986 of Sultan Singh, J. :- 1. Whether the award in question is liable to be set aside for any of the reasons, mentioned in the objections ? 2. Whether the petitioner is entitled to interest ? If so, at what rate and from what date ? 3. Relief. Evidence was ordered to be recorded on affidavits. Whether the award in question is liable to be set aside for any of the reasons, mentioned in the objections ? 2. Whether the petitioner is entitled to interest ? If so, at what rate and from what date ? 3. Relief. Evidence was ordered to be recorded on affidavits. Affidavit was filed by the Delhi Development Authority on 20th October, 1986 while the counter- affidavit was filed by the petitioner on 18th November, 1986. No rejoinder- affidavit was filed by respondent No. 1 in spite of directions to that effect. When the case was listed for arguments, none appeared for the Delhi Development Authority and as such I proceeded to hear the learned counsel for the petitioner and having heard him orders were reserved. Before orders could be pronounced, an application was moved by the objector-Delhi Development Authority with a request that it be also heard. Accordingly the case was reheard any after counsel for the parties addressed their arguments, I went through the file and after giving my considered thought to the matter before me I have come to the following findings. ( 4 ) ISSUE NO. 1 The first contention of the learned counsel for respondent No. 1 is that the arbitrator has gone beyond the scope of his reference and has thereby committed misconduct apparent on the face of award. Elucidating this objection he has drawn my attention to para 4 (i) of objections which reads that "the unnecessary and unwarranted remarks and observations given by the learned arbitrator in the award against the Delhi Development Authority clearly show that the learned arbitrator was prejudice against the department concerned and was not acting in the matter in an impartial manner". Similarly in para 4 (ii), it has been stated that the observations of the arbitrator that "there was an effor to coyer up certain short-comings and the original documents were tampered", showed that arbitrator was sitting with a prejuidiced mind and was not acting impartially. From the perusal of the award which I hereby mark Ex Al, I find that after the arbitrator has given his findings on various claims, some observations with regard to "disciplinary aspect arising out of this arbitration case" have been made by the arbitrator therein. Mr. Harish Malhotra, the learned counsel for Delhi Development Authority has objected to these observations. From the perusal of the award which I hereby mark Ex Al, I find that after the arbitrator has given his findings on various claims, some observations with regard to "disciplinary aspect arising out of this arbitration case" have been made by the arbitrator therein. Mr. Harish Malhotra, the learned counsel for Delhi Development Authority has objected to these observations. I am afraid if observation under this heading have affected the impartiality of the arbitrator in any manner whatsoever. It cannot be conclude by these observations that the arbitrator was prejudiced against the department. He was a senior officer of the department itself holding the rank of Superintending Engine and it was in that capacity that he thought it proper to make those observations so that the infirmities which have come to his notice during the arbitration proceedings in the functioning of the department do not recur. He is now stated to be Chief Engineer of Delhi Development Authority. It cannot be said that by making these observations the arbitrator has shown any bias or prejudice against the Delhi Development Authority. His thought process is not adverse to that of interest of Delhi Development Authority. la view thereof, it cannot be said that the award is liable to be set aside on this ground. ( 5 ) THE next contention of the learned counsel for respondent No. 1 is that the arbitrator has ignored that "wax seals do get damaged and there was nothing unusual in putting fresh seals of the department concerned on the documents". This is in the context of arbitrator s observation that "the original seals of Asian Games Division X had been replaced by seals of Housing Division XXVI on the original document". What is important to note here is that such replacement has not been disputed by respondent No. 1 since it has itself been stated in said para that "the said Asian Games Division X was no more in existence and the work of said Division was being looked after by Housing Division XXVI". It is also urged by Mr. Malhotra that the learned arbitrator has wholly ignored the fact that in due course by passage of time to excessive handling of record and transfer of file from one place to another the was seals do get damaged and there was nothing unusual in putting fresh seals of the department concerned on the documents. It is also urged by Mr. Malhotra that the learned arbitrator has wholly ignored the fact that in due course by passage of time to excessive handling of record and transfer of file from one place to another the was seals do get damaged and there was nothing unusual in putting fresh seals of the department concerned on the documents. Be that as it may, it was duty of the Engineer incharge of this job to secure these documents from damage to the seals and if refixing of seals was necessary it should have been done after notice to contractor and preferably in his presence. The arbitrator was at liberty to reach to such conclusion as he chose in this background but this hardly goes to suggest that the arbitrator has misconducted himself or the proceedings. The arbitrator would be justified in such situation of draw his conclusions and his conclusions cannot be found fault with by the objector now. This Court would not reappraise the entire matter. In view thereof, I hold that the award is not liable to be set aside on this ground either. ( 6 ) IT has also been contended on behalf of defendant No. 1 by its learned counsel relying upon para 4 (iv) and (v) of the objections that the arbitrator has given undue importance to the documents having been signed by two different representatives. This is a question whose effect was to be seen by the arbitrator and it cannot be said that conclusions of the arbitrator can be assailed on that ground before this Court. This Court does not sit as a Court of Appeal against the award of the arbitrator and consequently I find no force in this objection either. ( 7 ) IN para 4 (vi) of the objections, it has been urged by defendant No. 1 that "arbitrator has wholly ignored the documents on record and has gravely erred in awarding agreements of the contractor against claim No s. 1 to 4". I have gone through the award and the discussion on claim Nos. 1 to 4 therein. There is nothing which suggests that the arbitrator has misdirected himself in coming to his conclusions. No fault can be found with the reasoning of the arbitrator either. I have gone through the award and the discussion on claim Nos. 1 to 4 therein. There is nothing which suggests that the arbitrator has misdirected himself in coming to his conclusions. No fault can be found with the reasoning of the arbitrator either. The entire correspondence between the parties was before the arbitrator as the perusal of arbitration proceedings shows, and if after perusal of entire correspondence the arbitrator has come to certain conclusion and finding, an the same cannot be now assailed merely because reference has been made to R-1 and R-2 only in the award. There is no error in the award which is apparent on the face of it. In view thereof, it cannot be said that there is any force in this objection either. ( 8 ) IN para 4 (vii) and (viii) of the objections, it has been urged by respondent No. 1 that arbitrator has wholly ignored the fact that the claimants are well established old contractors and were persons having great influence every-where including muscle power. It is doubt if these aspects are of any relevance for the purposes of deciding the validity of the award and as such these are wholly irrelevant more so when no use of muscle power is alleged by contractor and it cannot be said that the award is liable to be set aside on any of these grounds. ( 9 ) IT has next been contended on behalf of respondent No. 1 that the arbitrator has wholly misconducted himself in awarding claim for extra wood used in claim No. 5. It cannot be said that any fault can be found with the reasoning of the arbitrator therein. It cannot be said that arbitrator has misread letter dated 9th June. 1982 The arbitrator cannot be said to have misdirected himself or the proceedings in this aspect of the matter. He has not gone beyond the terms of his reference. He has not mis-interpreted any clause of the arbitration agreement or the letter dated 9th June, 1982. The entire correspondence including R-l, R-2 and R-3, was before arbitrator and his findings are based upon appraisal thereof. More fact that reference has been made to only some of the letters would not invalidate the findings of arbitrator, more so whom such letters (R-l, R-2 and R-3) refer only to some items only of the claim. The entire correspondence including R-l, R-2 and R-3, was before arbitrator and his findings are based upon appraisal thereof. More fact that reference has been made to only some of the letters would not invalidate the findings of arbitrator, more so whom such letters (R-l, R-2 and R-3) refer only to some items only of the claim. This Court would not and cannot sit in appeal against the findings of the arbitrator. It would not similarly reappraise the evidence either. This Court cannot come to its own findings unless the findings of the arbitrator are perverse. It cannot be said that the arbitrator has ignored any document on record. If on accumulative consideration of entire evidence and material before him arbitrator comes to a certain conclusion, unless such conclusion is perverse, this Court would not substitute its conclusions for arbitrator s. The contractor has explained the circumstances in which certain letters were written by him and the arbitrator appears to have accepted his explanation and has come to certain conclusion. In these circumstances, it would be difficult for this Court to interfere with findings of the arbitrator. Consequently it cannot be said that the arbitrator s award is liable to be set aside on this ground. ( 10 ) THERE is no other objection to the award which has been taken up in the objections by respondent No. 1. I have gone through the award Ex. Al as also the proceedings before the arbitrator and I do not find that anything has been shown by respondent No. 1 which suggests that the award is liable to be set aside. There is nothing in the award to suggest that thought process of arbitrator is wrong. It cannot be said that the arbitrator has misdirected himself or the proceedings. It also cannot be said that the arbitrator has travelled beyond the scope of arbitration. It is also not alleged in the objections specifically that the award suffers from error of law apparent on the face of it. Award is a speaking one and there is nothing on the face of the award to show that the reasoning given by the arbitrator in pursuance of clause 14 of agreement is perverse. In view thereof, I find no force in these objections. ( 11 ) IT would also be appropriate at this stage to consider the legal position on the subject. In view thereof, I find no force in these objections. ( 11 ) IT would also be appropriate at this stage to consider the legal position on the subject. In Champsey Bhara and Company v. Jivraj Balloo Spinning and weaving Company Ltd. , AIR 1923 Privy Council 66. it was held that: "where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact. The only exceptions 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, 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. " and in this context it has further been observed: "an error in law on the face of the award means 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. " ( 12 ) THE position came to be considered in Union of India v. A,l Rallia Ram, AIR 1963 S. C. 1985. in which it was held as follows: "an award being a decision of an arbitrator whether a lawyer or a layman chosen by the parties, and entrusted with power to decide a dispute submitted to him is ordinarily not liable to be challenged on the ground that it is erroneous. The award of thearbitrator 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. 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 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. "the Supreme Court further also observed that; "an error in law on the face of the award means:" 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 setting first what that contention is, and then going to the contract on which the parties rights depend to see if that contention is sound. " In M/s, Allen Berry and Co. Pvt. Ltd. v. The Union of India, AIR 1971 SC 696 . the Supreme Court had held: "as the parties choose their own Arbitrator they cannot when the award is good on the face of it, object to the decision either upon the law or the facts. Therefore, even when an arbitrator commits a mistake either in law or in fact in determining the matters referred to him, but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside notwithstanding the mistake. Mere reference to the contract in the award is not to be held as incorporating it. " The Supreme Court reiterated in N. Chellappen v. Secretary, Kerala State Electricity Board and Another, AIR 1975 SC 230 . that: "the Umpire as sole arbitrator was not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact, that is no ground for challenging the validity of the award. that: "the Umpire as sole arbitrator was not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact, that is no ground for challenging the validity of the award. It is only when an erroneous proposition of law is stated in the award and which is the basis of the award, can the award be set aside or remitted on the ground of error of law apparent on the face of the record. " It has always been open to the arbitrator to given a non-speaking award and in that context in Firm Madanlal Roshanlal Mahajan v. Hukum Chand Mills Ltd. Indore. , AIR 1967 SC 1030 . it was observed that: "in the present case, the arbitrator gave no reason for the award. We do not find in the award any legal proposition which is the basis of the award, far less a legal proposition which is erroneous. It is not possible to say from the award that the arbitrator was under a misconception of law. The contention that there are errors of law on the face of the award is rejected. "it may be mentioned here that this Court cannot sit upon judgment as a Court of Appeal on the findings and decision of the arbitrator and from the perusal of the award, in the instant case, it cannot be said that the arbitrator has misdirected himself or the proceedings. It also cannot be said that the findings of the arbitrator are perverse. ( 13 ) MY attention has been drawn on behalf of the plaintiff to M/s Hindustan Tea Co. v. M/s K. Sashikant and Co. and Another, AIR 1987 SC 81 . in which it was held that: "under the law, the arbitrator is made the final arbiter of the dispute between the parties The award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts. " Likewise M/s. Alepi Par shad and Sons Ltd. v. Union of India, AIR 1960 SC 588 . has been relied upon by the learned counsel for the plaintiff. " Likewise M/s. Alepi Par shad and Sons Ltd. v. Union of India, AIR 1960 SC 588 . has been relied upon by the learned counsel for the plaintiff. It was held therein that: "the award of an arbitrator may be set aside on the ground of an error on the face thereof only when in the award or in any document incorporated with it, as for instance, a note appended by the arbitrators, stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous. "this is not the position in the instant case. ( 14 ) THUS, the legal position on the subject is that the courts do not sit as Appellate Courts over the verdicts of the arbitrators and even the powers of the court to review the award are limited. Ordinarily the courts approach an award with a desire to support it, if that is reasonably possible, rather than to destroy it by calling it illegal. The courts would not even go to the merits of the case and reappraise and re-examine the evidence before the arbitrator. Unless there is a specific arbitration agreement between the parties requiring the arbitrator to give reasons for his verdict, the arbitrator is not bound to give reasons for his verdict and can give a non-speaking award. The courts cannot even go into the sufficiency or insufficiency of the evidence for the award of the arbitrator. Likewise, courts ordinarily do not see for the reasonableness of the reasons given by the arbitrator or sufficiency of those reasons unless the reasons given are perverse. Likewise unless there is an error apparent on the face of the award, the award would not be interfered with. In this view of the legal position as well, it cannot be said that this award is liable to be set aside for any reasons whatsoever. Accordingly, issue No. 1 is decided against the Delhi Development Authority and in favour of the plaintiff. ( 15 ) ISSUE No. 2: The arbitrator has allowed interest @ 12% per annum from the date of expiry of the maintenance period or the finalisation of the bill whichever is earlier till publication of his award. Accordingly, issue No. 1 is decided against the Delhi Development Authority and in favour of the plaintiff. ( 15 ) ISSUE No. 2: The arbitrator has allowed interest @ 12% per annum from the date of expiry of the maintenance period or the finalisation of the bill whichever is earlier till publication of his award. I find no reason to refuse interest at 12% per annum to the plaintiff on the awarded sum from the date of award till the date of decree and at the same rate from the date of decree till the date of realisation and I hold accordingly on this issue. ( 16 ) ISSUE No. 3: In view of my discussion and findings upon issues Nos. 1 and 2, I find no force in these objections which are liable to be dismissed and are dismissed and as such award Ex. Al is hereby made a rule of Court. A decree be drawn in terms of the award. ( 17 ) THIS disposes of the suit as also the objections being I. A. No. 5944/85.