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1992 DIGILAW 492 (PAT)

Bharat Coking Coal Ltd. v. L. K. Ahuja & Co.

1992-12-22

R.N.SAHAY

body1992
JUDGMENT : R.N. Sahay, J : This appeal under section 39(vi) of the Arbitration Act. 1940 arises out of the award dated 15.1.1985 passed by the Sole Arbitrator Sri M.P. Sharma who at the relevant time was the Deputy Chief Engineer, B.C.C.L. 2. The award was filed in the court of the Subordinate Judge, Dhanbad. The appellant on 1.3.1985 filed an objection and prayed that the award of the arbitrator be modified as it was not in accordance with law and was liable to be rejected on several grounds raised in the objection petition. 3. The learned Subordinate Judge, Dhanbad considered the objection of the appellant and by an order dated 3.6.1985 rejected the objection holding, that the award was legal and valid and did not warrant any interference. 4. The dispute between the respondent and the appellant was referred to the sole arbitrator at the instance of the respondent in the following circumstances. 5. On 20.6.1977 the appellant invited tender for construction of 99 units “B” type quarters at Saridhella (Koli Nagar). The respondent submitted tender which was duly accepted by the appellant and work order was issued vide order dated 23.2.1977. Consequently a written agreement was executed between the parties. 6. According to the case of the respondent, it performed the contract in terms of the agreement but the appellant raised untenable objections to the appellants bill and detained the final bill account. By clause 8 of the agreement it was stipulated that the final bill would be prepared within one month of completion of the contract work. The respondent had offered in case the bill was paid within three months of the completion of the work 73% of the full value of the work would be deducted from the bill of the respondent. According to the case of the respondent, the appellant wrong-fully claimed rebate indicated above without making payment on completion of the work. As the appellant had violated the terms, they were not entitled to claim rebate. The arbitrator found that the claimant-respondent had fulfilled their commitment but the appellant did not fulfill their promise as per the terms of the contract and detained final bill amount. 7. The arbitrator decided the claim of the respondent under several heads. 8. The arbitrator in the exhaustive reasoned award rendered by him decided the claim as follows. The arbitrator found that the claimant-respondent had fulfilled their commitment but the appellant did not fulfill their promise as per the terms of the contract and detained final bill amount. 7. The arbitrator decided the claim of the respondent under several heads. 8. The arbitrator in the exhaustive reasoned award rendered by him decided the claim as follows. (a) Refund of rebate offered against the appellant for final bill. There was no justification on the part of the appellant to hold the final bill of the claimant on the plea that the bill could not be paid because the claimant had not furnished the royalty clearance certificate from the competent authority and account for bricks supplied to the claimant. The arbitrator found that the appellant was not entitled to avail the rebate deducted from R/A bills of respondent, as the promise to make payment of bill was within 90 days and the commitment had not been fulfilled (b) Payment of final bill The arbitrator has stated in the award that the claimant-respondent and the appellant had jointly furnished statement indicating therein the amount payable as final bill to the claimant (Annexure-X 7 of the award). This statement was prepared on the basis of final measurement recorded in the measurement book on the rates entered in the schedule of the contract agreement and also for such extra items for which rates were acceptable to both the parties. The arbitrator found that the bill should have been paid to the claimant by 13.5.79. There was no valid reason for the delay in deciding against the extra items. (c) Payment of escalation : The case of the appellant-respondent was that there had been increase the price of the cement on several occasions in between the date of acceptance of tender and the dates of actual procurement As per contract, this become dues for payment in subsequent running account bills. But the escalation has not been paid to them till date. It was contended on behalf of the appellant before the arbitrator that as payment certificate from the supplier was not furnished by the claimant for such escalation in price, the payment could not be made in time. But the escalation has not been paid to them till date. It was contended on behalf of the appellant before the arbitrator that as payment certificate from the supplier was not furnished by the claimant for such escalation in price, the payment could not be made in time. The learned arbitrator considered the documents and the submissions of both the parties and found "the amount as per statement for escalation, the amount paid in excess as advance are payable to the claimant with effect from 1.6.1979 by the Opposite Party." The amount was worked out jointly by the parties and filed before the arbitrator. (d) Payment of labour escalation : The arbitrator has "held having assessed the situation based on the discussions and facts I am of the opinion that labour escalation for extra items is payable for the following: (i) To such items for which the rates have been decided after observing steps 1 to 3 of the said circular has to other items for which the analysis has been worked out by the petitioner (labour element based on basis rates of the schedule of the Opposite Party. Both the parties having agreed to the above proposition submitted a statement indicating therein the labour escalation payable on such extra items as indicated above and as per submissions made jointly by both the parties sofar payable amount works out to Rs. 4,552.95. This amount became payable to claimant on 1.6.1979 (Annexure-X-12)" (e) Refund of rebate deducted on extra items : The arbitrator on the basis of the statements furnished by both the parties held double recovery of rate was to be refunded to the respondent when final bill become due for payment. (f) Payment for costs of extra items: The claimant- respondent had furnished before the arbitrator a list of extra items which he carried out as per the requirement at site under the orders of the Site officers. Inclusion of these extra items in the measurement book was turned down by the appellant on the ground that these were part of the schedule as provided in part C and D of the agreement. The arbitrator partly allowed the claim of the respondent under this head. 8. The arbitrator after thoroughly examining every aspect of the matter in dispute passed the award (page 126 of the paper book). The arbitrator partly allowed the claim of the respondent under this head. 8. The arbitrator after thoroughly examining every aspect of the matter in dispute passed the award (page 126 of the paper book). The objections to the award are as follows :- (i) The reasons of the learned Arbitrator while allowing the award on account of rebate to the extent of Rs. 28,873.50 are not sound in as much as the learned Arbitrator has failed to take into consideration that the claim of the plaintiff on account of the rebate deducted was Rs. 11.340/- which is much less than the amount awarded. The plaintiff itself has offered the rebate which was accepted by the defendant and the item of rebate was there in the contract. (ii) Arbitrator had not properly considered the objection of the defendant for non payment of the final bill and there by erred in awarding a sum of Rs. 2,54,153.56 on account of final bill. Here also the learned Arbitrator failed to take into consideration that the claim of the plaintiff on account of final bill was Rs 1,92,740/- whereas he has awarded the sum of Rs. 2.54,143,56. The learned Arbitrator erred in his finding that the due date or the final bill was 1.6.1979 without taking into consideration the submission of the opposite party defendant that the delay in making payment of the final bill was due to the non-cooperation as well as for failure to comply with mandatory terms of the contract by the plaintiff and for that the defendant cannot be held liable. There was no inordinate delay in releasing the final bill to the plaintiff on the side of the defendant. There were valid reasons for withholding the payment of the final bill on the part of the defendant. (ii) Arbitrator is wrong in his approach while awarding the claim on account of escalation on cement to the extent of Rs. 28,179/6 without properly considering the nature of the claim and the replies of the defendant before him. (iii) Arbitrator erred in holding that the claim on the account of escalation in cement price is payable to the claimant with effect from 1.6.79 by the defendant. 28,179/6 without properly considering the nature of the claim and the replies of the defendant before him. (iii) Arbitrator erred in holding that the claim on the account of escalation in cement price is payable to the claimant with effect from 1.6.79 by the defendant. Without prejudice even ii it is held that the claim on account of escalation of cement is payble then the due date of such payment should be from the date of award and not from any prior date. (iv) Arbitrator erred in awarding a sum of Rs. 11,148.12 on account of labour escalation, without considering the submissions made before by the defendant. (v) Arbitrator erred in his finding that the amount on account of labour escalation becomes payable to the claimant-plaintiff on and from 1.6.79, the due date cannot be from 1.6.79 which is long before the date of award. (vi) Arbitrator has not properly considered the objections of the opposite party while allowing the claim of the claimant plaintiff on account of the extra items of the works not recorded in the measurement book. The defendant has never accepted the payment to be made to the claimant-plaintiff but had indicated in the statement of the extra work done in the contractual work. In his order the learned Arbitrator has stated that some claimed items have been accepted by the defendant whereas in fact the opposite party has accepted the work only and not the amount awarded. The Items are at sl. Nos. 8,11,15,25 and 29 of the consolidated statement of the awarded amount in favour of the claimant. The opposite party has never accepted for payment of such item of work and the same is not payable because the further payment of those items of work will amount double payment for the same work as those items of work have already been paid to the claimant plaintiff. (vii) Learned Arbitrator erred in allowing interest at the rate of 12% per annum with effect from 1.6.79 on a sum of Rs. 2,94,191.72 till its date of payment or date of court decree which ever is earlier". 9. Shri Kameshwar Prasad, the learned counsel for the respondent raised preliminary Objection that this appeal is not maintainable because the appellant in his objection had prayed to modify the award given by the arbitrator. There was no prayer for setting aside the award. 2,94,191.72 till its date of payment or date of court decree which ever is earlier". 9. Shri Kameshwar Prasad, the learned counsel for the respondent raised preliminary Objection that this appeal is not maintainable because the appellant in his objection had prayed to modify the award given by the arbitrator. There was no prayer for setting aside the award. Section 15 of the Arbitration Act, 1940, empowers the court to modify or correct the award; (a) Whore it appears that a part of the award is upon a matter not referred to arbitration; (b) Where the award is imperfect in form or contains in obvious error; (c) Where award contains a clerical mistake or an error arising from an accidental slip or ommission. Under Section 39 while an appeal lies against the order refusing to set-aside an award, no appeal lies against order refusing to modify or correct the award. It, therefore, follows that the High Court cannot in appeal against an order refusing to set-aside sward, consider the point raised by the appellant that the court below should have gone into the question whether the award should be modified or not (A.I.R. 1959 : Mys : 787 and A.I.R. 1973 Punjab, 114.) 10. Shri Debi Prasad, the learned counsel for the appellant, on the other hand, submitted that as in the instant case, the trial court by a composite order rejected the objection to the award and at the same time by the same order directed award to be made rule of the court, this appeal is maintainable. The learned counsel relied on a case reported in A.I.R. 1968: Pat: 454 and A.I.R. 1969 Pat: 307, A.I.R. 1970: Pat: 119. Shri Prasad is right in his submission. Once the court refused to set-aside the award, the court has to pronounce award as per the terms of the award, hence the appeal is maintainable. 11. In the objection filed by the appellant before the Subordinate Judge, there was also a prayer to reject the award as it was not in accordance with law. In my opinion, although the prayer of the appellant to modify the award in substance, the application was for setting-aside the award. The appeal is, therefore, maintainable. 12. 11. In the objection filed by the appellant before the Subordinate Judge, there was also a prayer to reject the award as it was not in accordance with law. In my opinion, although the prayer of the appellant to modify the award in substance, the application was for setting-aside the award. The appeal is, therefore, maintainable. 12. Shri Debi Prasad, the learned counsel for the appellant submitted that the order of the subordinate Judge rejecting the objection of the appellant is based on no reasons and cannot be sustained. He submitted that the appellant had raised objection with regard to the claim of the respondent for rebate on the ground that although respondent had claimed Rs. 11,000/- the arbitrator awarded rebate to the extent of Rs. 28,000/-. Similar objections were raised with regard to the final payment of the bill. The argument is that the arbitrator awarded claim for exceeding the claim of the respondent, It was submitted that the award was beyond the limit of the contract, therefore. It was liable to be set-aside in view of the decision of the Supreme Court in A.I.R. 1991 (4) S.C.C. : 93. 13. Shri Kameshwar Prasad, the learned counsel for the respondent submitted that the arbitrator had passed the award on the basis of calculations jointly made by the parties. He argued that the arbitrator did not exceed the jurisdiction as contended by the learned counsel for the appellant. It is submitted that the court cannot go beyond the award when award was passed on agreed statement given by the parties. Shri Kameshwar Prasad placed the award in detail although it was not necessary to demonstrate that the arbitrator, who was high official acted fairly and in accordance with the rule, of justice and equity in making the award. Shri Kameshwar Prasad has placed reliance on Sudarsan Trading Co. Vrs. Government of Kerla: A.I.R. : 1989 : S.C. : 890. In this case Sabyaschi Mukherji. Shri Kameshwar Prasad has placed reliance on Sudarsan Trading Co. Vrs. Government of Kerla: A.I.R. : 1989 : S.C. : 890. In this case Sabyaschi Mukherji. J. enunciated the scope of Sec. 30 of the Act thus : "An award may be remitted or set-aside On the ground that the Arbitrator in making it, had exceeded his jurisdiction and evidence of matters not bearing on the face of it, will be admitted in or to establish whether the jurisdiction had been exceeded or not, because the nature of the dispute is something it has to be determine out side the award whatever might be said about it in the award or by the arbitrator. See in this connection, the observations of Russell on the Law of Arbitration, 20th Edn. 427. Also see the observations of Christophs Brown Ltd Vrs. Ganosserschoft oesterreich ischer, (1954) 1 QB. 8 at P. 10 and Dalmia Diary Industries Ltd Vrs. National Bank of Pakistan, (1978) 2L 10 yd's Rep. 223. It has to be reiterated that an arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award. In Halsbury's Laws of England (4th Edn, Vol.2. para 622) one of the misconducts enumerated is the decision by the arbitrators on a matter which is not included in the agreement of reference. But in such a case one has to determine the justification between an error within the jurisdiction and an error in excess of the jurisdiction. See the observations in Anisminic Ltd Vrs. Foreign Compensation Commission, (1969) 2. A.C.C. 147 & Regina V. Noseda, Field. knight Fitzpatrick, (1958) 1 WLR 793. But, in the instant case, court had examined the different claims not to find out whether these claims were within the disputes refereable to the arbitrator, but to find out whether for arriving at the decision, the arbitrator had acted carefully or incorrectly. This is, in our opinion, the court had no jurisdiction to do, namely, substitution of its own evaluation of-the conclusion of law or fact to come to a conclusion that the arbitrator had acted contrary to the bargain between the parties whether a particular amount was liable to be paid or damages liable to be sustained was a decision with in the competency of the arbitrator in this case. By Purporting to construe the contract the court could not take upon itself the burden of saying that this was contrary to the contract and as such beyond jurisdiction. It has to be determined that there is a destinction of the arbitrator and the disputes as to in what whether that jurisdiction be exercised “...........” The learned Judge further proceeds to point out that "Courts are some time persuaded to rely on this ground to set aside an award when, actually, what they were embarking upon was an interpretation of the contract and a critism of the Arbitrator's approach thereto”. 14. It is well settled that the court's endeavour should be to uphold the award and try to maintain it unless any of the grounds mentioned in Section 30 is established by material evidence, i.e. there is positive proof of the arbitrator mis-conducting himself or the proceeding before him or the award is improbably procured or otherwise invalid. It is also well settled that the arbitrator is the Judge of both facts and law. 15. It is well settled courts will not sit as courts of appeal to consider the correctness of an award on the merits in respect of matters of facts or even law (29 Indian Appeal: 51 P.C.) (A.I.R. 1989 : S.C. 1263) & (A.I.R. 1989 : S.C. 777) An award being a decision of an arbitrator whether a lawyer or a lay-man chosen by the parties entrusted with power to decide a dispute submitted to him is ordinarily not liable to be challenge on the ground that it is extraneous. The award of the arbitrator is ordinarily final and conclusive, unless a contrary intention is disclosed by the agreement. The award is a decision of the domestic tribunal chosen by the parties and the civil court which are entrusted with the power to facilitate arbitration and to effectuate the award cannot exercise appellate power over the decision, wrong or right, the decision is binding, if it be reached rarely after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement Union of India Vrs. Akallia: 1963. S. C. 1685) 16. In a recent decision of the Supreme Court in Hindustan Construction Limited Vrs. Akallia: 1963. S. C. 1685) 16. In a recent decision of the Supreme Court in Hindustan Construction Limited Vrs. State of J. & K. A.I.R. 1992: S.C. : 2192, the scope of section 30 of the arbitration Act has been considered by the Supreme Court once again. In this case the High Court had set aside a part of the award on examining the documents and proceeded to examine whether those reasons were right or erroneous. The Hon'ble Supreme Court relied on the following observations of Lord Weight in Absalon Limited Vrs. Great Western Garden Village Society Ltd. : A.I.R. 1933: A.C. 593." As the action is set-aside the award for matter appearing on its face court is debarred from considering any matter which does not appear in the award itself or in documents incorporated in it" and observed the High Court had adopted a wrong approach. 17. When we take note of above principles and apply them to the facts of the present case, we find no scope for the party to invoke the aid of Section 30 of the Act for the purpose of setting-aside the award. Once there is a refusel to set-aside the award, then the application of Section 17 of the act come into force and there is no other alternative for the court except to pronounce judgment as per the terms of the award, which shall be followed by a decree. The court has no jurisdiction to deal judicially with the merits of the case determined by the arbitrator. It is a furtile grounds for the parties against whom the award has gone to take all possible and impossible grounds for challenge the award. The whole idea is often to create a confusion by bringing in the entire proceedings of records of the reference and trying to raise suspicion in the mind of the court and particularly when the award is made against Government or statutory Corporation and Government under takings as it is very catching and attractive argument that the award holder bas procured the award against the Government for a huge sum of money and as such it is perverse and should be set aside. It depends really on the experience and in sense of the court on hearing the application to yield to such temptation and investigating the entire matter of reference with a suspicious mind by going into the statements, counter statements, other documents etc. filed before the arbitrator and feed the suspicion by coming to a separate possible conclusion than what the arbitrator has arrived at in his award. It is to be remembered that the Arbitration Act is complete by itself and except only on the specified grounds under section 30 and the principles laid-down by judicial precedence, the court cannot set- aside the award. 18. For the reasons aforesaid, this appeal must fail and is dismissed with costs. Appeal dismissed with cost.