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1997 DIGILAW 214 (KER)

Union of India v. Taj Sea Foods

1997-06-10

D.SREEDEVI, VILAS VINAYAK KAMAT

body1997
JUDGMENT Kamat, J. - 1. The subject matter of this appeal is the order passed by the learned Principal Sub Judge, Kochi in I. A. No. 883/1994 in O.S. No. 247/1983. By this order the application of the plaintiff applicant which was filed on May 23, 1994 praying for a decree in terms of the award of the Umpire passed on April 2, 1994, was allowed. 2. The learned Judge issued notices and in pursuance thereof an affidavit dated December 14, 1994 was filed by the respondents appellants for setting aside the award. The award, as stated above, of the Umpire is for an amount of Rs. 6,49,339. The learned Judge by the impugned order held that the application with a prayer to pass a decree in terms of the award will have to be granted and accordingly granted the application. In the process of reasoning the learned Judge held that the copy of the award having been served on the respondents on April 2, 1994 itself and in pursuance thereof the respondents appellants having filed an application to set aside the award, filed in the nature of an affidavit on December 14, 1994, would be obviously out of time, being unacceptable and also being barred by limitation. 3. The learned Judge has also considered the limits of the powers of the court under S.30 of the Arbitration Act as interpreted and as observed in the context that the court in such a situation would not be one sitting in appeal, expected to examine in detail the evidence adduced by the parties or even the correctness of the decision taken by the Umpire on the evidence adduced. The learned Judge observed that there is no error apparent on the face of the record or in the award and the reasoning given by the Umpire cannot be re-appreciated, even a different conclusion could have been arrived at on the facts available on record and has held that the decision of the Umpire who was chosen by the parties themselves would have to be held binding and achieve finality. Even after examining the award the learned Judge has observed that she found it as a reasoned award giving details as to how she has arrived at the conclusion. Even after examining the award the learned Judge has observed that she found it as a reasoned award giving details as to how she has arrived at the conclusion. On the basis of evidence, it is held, the Umpire has held that there is a breach of contract and has given reasons to arrive at the quantum of damages. It is also particularly observed that there is no misconduct on the part of the Umpire in passing the award. 4. Dealing with the contention that the Umpire at the time of passing of the award has ceased to be an Umpire leading to the situation that the award would be void as not sustainable on that count, the learned Judge having taken into consideration aspects that the time for filing the award was extended upto March 31, 1994 and as such March 31, 1994 as well as April 1, 1994 . being public holidays, the award could only have been filed to be dealt with within sufficient time on the next working day being April 2, 1994. The award having been filed on the said day, the learned Judge rejected the objection as unsustainable. 5. It needs to be mentioned that the learned Counsel for the appellant realising the limitations under S.30 of the Arbitration Act, 1940 has confined his submissions which can be only referable to clause (c) thereof to the effect that an award has been otherwise invalid making it clear to us that it cannot be said that the award has been improperly procured. 6. The limits and scope of the powers of the court dealing with an application praying for a decree in terms of the award is neatly settled down by the two decisions of the apex court. In fact in the first Tea Co.'s case AIR 1987 SC 81 M/s Hindustan Tea Co. v. M/s K. Sashikant and Co. in Para.2 thereof the following are the tersed observations. "Under the law, the Arbitrator is made the final arbiter of the dispute between the parties. In fact in the first Tea Co.'s case AIR 1987 SC 81 M/s Hindustan Tea Co. v. M/s K. Sashikant and Co. in Para.2 thereof the following are the tersed observations. "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." This is a very short judgment of two paragraphs wherein the apex court observed and found that the award is a reasoned one and the objections indeed cannot be taken into consideration within the limited ambit of challenge admissible under the scheme of the Arbitration Act. 7. However in the Coimbatore Sangam's case AIR 1987 SC 2045 Coimbatore Dist. P.T. Sangam v. Bala Subramania Foundry the apex court has considered its earlier case law observing that the law on this aspect is settled. Referring to the 1964 decision 1964 (3) SCR 164 : AIR 1963 SC 1685 Union of India v. A. L. Rallia Ram the following is the observation: "This court reiterated that in order to make arbitration effective and the awards enforceable, machinery was devised by the Arbitration Act for lending the assistance of the ordinary courts. The court was also entrusted with the power to modify or correct the award on the ground of imperfect form of clerical errors, or decision on questions not referred, which were severable from those referred. The Court had also power to remit the award when it had left some matters referred undetermined, or when the award was indefinite, where the objection to the legality of the award was apparent on the face of the award. The Court might also set aside an award on the ground of corruption or misconduct of the arbitrator, or that a party had been guilty of fraudulent concealment or wilful deception." Then it is observed that even if the decision appeared to be erroneous, the Court could not interfere with the award if otherwise proper. In the context of the reasoning the apex court has also aptly made the following observations: "The award of the Arbitrator was ordinarily final and conclusive, unless a contrary intention was disclosed by the agreement. In the context of the reasoning the apex court has also aptly made the following observations: "The award of the Arbitrator was ordinarily final and conclusive, unless a contrary intention was disclosed by the agreement. The award was the decision of a domestic tribunal chosen by the parties, and the civil courts which were entrusted with the power to facilitate arbitration and to effectuate the awards, could not exercise appellate powers over the decision. Wrong or right the decision was 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." 8. Laying down what was already reiterated in 1964 decision, the apex court has also drawn strength from 1970 decision and has made additionally the following observations: "An error of law on the face of the award meant that one could find in the award, or in a document actually incorporated thereto, as, for instance a note appended by the Arbitrator stating the reasons for his judgment, some legal proposition which was the basis of the award and which one can say is erroneous." 9. The impugned order requires re-examination in the context of the declaration of law referred to hereinbefore. We have already stated that the learned Judge has, after holding that the objections filed by the appellants - respondents on December 14, 1994 being barred by limitation, has refused to consider the objections on that count. We find that this conclusion requires our endorsement in view of Art.119 of the Limitation Act, 1963 providing a statutory limitation of 30 days for an application for setting aside an award or getting an award remitted for reconsideration, emphasising that the starting point of the period of limitation of 30 days would be the date of service of the notice of the filing of the award. There is no dispute that the appellants - respondents received the notice calling upon the respondents to file their objections on June 24, 1994. Therefore the learned Judge was aptly right in discarding the objections filed leisurely on December 14, 1994. In his characteristic fairness the learned counsel for the appellants found it difficult to repeat the contention that was submitted before the learned Judge that the Umpire did not file the award within the time stipulated. Therefore the learned Judge was aptly right in discarding the objections filed leisurely on December 14, 1994. In his characteristic fairness the learned counsel for the appellants found it difficult to repeat the contention that was submitted before the learned Judge that the Umpire did not file the award within the time stipulated. Apart from this it is not difficult to endorse the said conclusion of the learned Judge in Para.8 of her order for the reasons stated by her. 10. In the light of the observations of the apex court, normally the matter should end here and the obvious decision of the appeal would be its dismissal. 11. However, we have anxiously gone through the award of the Umpire to find satisfaction, to find that the Umpire is none other than a retired Judge of this Court (Kumari P. Jananki Amma). With the help of the learned counsel for the appellants we have been taken through the award almost ad verbatim. Although it is observed in the decisions referred to above" that the awards are reasoned, after going through the entire award we find with our limited experience of referring to the awards in detail that there cannot be a better reasoned award dealing with every possible aspect of the matter. Therefore, even though the learned Judge discarded the objections as obviously and justifiably barred by time, we have satisfied our judicial conscience to answer that the award is in all possible details and has considered every aspect. Also it is not necessary to dwell upon these aspects in great details in view of the conclusions endorsed by us earlier, we would summarise the salient features of the award only to note that the learned counsel for the appellants would have to be understood to be in greater difficulties in view of the limitations and in view of the reasoned award having its own weight in the circumstances. 12. It would be seen that original suit No. 247/1983 came to be presented before the learned Subordinate Judges, Kochi, the plaintiff being the managing partner of Taj Sea Foods, a firm doing business in seafood. The firms was also dealing in canned fish, the subject matter gets confined to two qualities of fish - Sardine and mackerel as canned fish products in natural pack. The firms was also dealing in canned fish, the subject matter gets confined to two qualities of fish - Sardine and mackerel as canned fish products in natural pack. Natural pack sardine and mackerel came to be developed by G. I. F.T. (Central Institute of Fisheries Technology), Cochin, a technology which was utilised by the plaintiff firm in the conduct of its business. The subject matter of the suit relates to the dues to which the plaintiff was entitled from the defendants therein who are the appellants before us. The supplies were to the Stores Department being subject to quarterly analytical tests for which fee was also to be paid by the plaintiff. It was understood that if the fish was found to be unfit for human consumption, the entire stock of the particular batch would be returned to the plaintiff for affording credit towards cost, transportation charges and incidental expenses incurred by the C.S.D. (Canteen Stores Department). The fish tins were to be packed in cardboard cartons or wooden cases. The contents were to be of a maximum quantity of 25 per cent of the quantity ordered. 13. As regards the mode of payment, the procedure that is found mentioned in the award would show that payment would normally be 45 days after receipt of the stock. It is specified in this regard that depending on the availability of funds, payment would be made immediately on despatch of the stock against proof of despatch at 2 percent cash discount. 14. The award also mentions and refers to correspondence. There is particular reference to Ext. A-1 and Ext. A-19 referring to confirmation to I.S.I, specifications and making it clear in the context that the items had no I.S.I, specification, but only index numbers. Index number for sardine being 0734 and that of mackerel being 0735. The Umpire also refers to the material relating to the technology of "Natural Pack" referable in Ext. A-8 letter to specify that the technology was developed by the Central Institute of Fisheries Technology specifying and making it clear that in fact there are no I.S.I, standards which have been drawn up and are in force for the natural pack leaving the situation to the nearest I.S.I, specification conforming to the process. A-8 letter to specify that the technology was developed by the Central Institute of Fisheries Technology specifying and making it clear that in fact there are no I.S.I, standards which have been drawn up and are in force for the natural pack leaving the situation to the nearest I.S.I, specification conforming to the process. It is mentioned that the comparable specification would be IS 3849-1976-specification for mackerel and similarly the specification for sardine is also found referred to in the award. The award discusses the material relating to the nearest specification conforming to the natural pack and has concluded that for mackerel it is IS 3849-1976 and for sardine it is IS 6671-1972. 15. We find thereafter that nine orders were placed by the appellants - respondents for delivery of fish sardine and fish mackerel at different depots and on the basis thereof 28 M.T. of sardines were sent to facilitate availability of wagons on priority basis and transport by railway. 16. The Umpire refers to a telegram dated March 3, 1983 sent by the appellants to withhold despatches of sardine and mackerel against the pending orders which was received on March 4, 1983. It is also particularly noted in this connection on the earlier day on March 3, 1983 by air courier service enclosing military credit notes putting on record that the validity of the notes had expired, the particulars are found in this connection in the discussion in regard thereto. The insistence of the plaintiff to send fresh military credit notes in place of the time-expired one is not acceded by the defendants. 17. There is a reference to further correspondence and the claim of the plaintiff as a result of cancellation of pending orders for the balance quantity of 31 tonnes of canned sardines and 21,55 tonnes of canned mackerel has also been referred as damage suffered by the plaintiff due to the refusal of the defendants to lift the goods as per the contract amounting to Rs. 11,62,367. 18. When we find reference to Clause.7 of the terms and conditions of purchase printed on the reverse of the purchase orders referring to the provision for reference to arbitrators with an additional provision for an Umpire in the event of any difference of opinion. The two Arbitrators differed leading to the resort to take up the proceedings before the Umpire. 19. The two Arbitrators differed leading to the resort to take up the proceedings before the Umpire. 19. The claim got crystallised at a sum of Rs. 11,05,826-80 as damages for breach of contract. 20. The Umpire has also emphasised certain positions not disputed by the defendants (appellants before us) in the proceedings before the Umpire; placing of the orders for supply of canned fish sardine and canned fish mackerel in natural pack is one of them. There is a reference to the fulfilment of the conditions in Exts. A-l and A-19 and an expectation that the orders to be executed have to fulfil the said conditions. 21. It is in this process the stipulation of the contract is also quoted as follows: "If the fish is declared unfit for army consumption entire of that particular pack could be returned to them for affording credit towards cost, transportation charges and other incidental expenses incurred by the Canteen Stores Department." The orders placed on the plaintiff were to supply to army personnel at various places in India and in regard thereto the Department has to bear the cost of transportation from Cochin to other places. It is also emphasised that the plaintiff was aware of the ultimate consumers of the goods and that satisfaction of the said consumers with regard to the fitness would be the deciding factor regarding the acceptability of the stock. It is in this process the Umpire has referred to the correspondence as well as the terms and conditions flowing from Exts. A-1 and A-19. It is important to note that the Umpire has observed that it is nobody's case that the fish was declared unfit for human consumption or they were returned to the plaintiff at any time. However, it is emphasised that what the defendants did was to distribute the stock for sale through Canteen Stores Department depots and it is observed that the said procedure was unjustified and belie the case that the fish did not satisfy the conditions mentioned in Exts. A-1 and A-19. 22. The Umpire has also considered the satisfaction of the standards at comparable basis as referred to above. A-1 and A-19. 22. The Umpire has also considered the satisfaction of the standards at comparable basis as referred to above. Even the process to ascertain as to whether the articles were sent as per purchase orders is also examined by the Umpire, and has observed that the contention that the supplies were not in accordance with the orders and what was supplied was fish in oil is the stand taken up which could be characterised as related move for the purpose of this dispute. In the process of reasoning the Umpire has also emphasised that it is admitted that a substantial portion of the orders placed had been completed. It is observed that it had been made out from the nine orders placed that the direction in some of them was to make delivery of wagon-loads, the minimum interval being one month, these could be despatched only when wagons were made available by the railway authority. 23. It is in this context the statement of claim of the plaintiff to the effect that it was 7500 cases of fish sardine valued at Rs. 14,81,355 and supply of 2000 cases of fish mackerel valued at Rs. 5,14,351.83 the total price being Rs. 19,95,706.83 as the crux of the dispute of the financial claim. The Umpire has been more than careful to note that out of the above amount Rs. 2,91,600 was received from M/s Spencer and Co. Ltd., Gauhati Branch and Rs. 6,98,281 was paid by the defendants towards the goods taken delivery of. In the process the correct figure of the balance has also been ascertained by the Umpire to be Rs. 10,05,825. 24. What we find thereafter is the production of the trading profit and loss statements by the plaintiff for the years ending March 31, 1983 and March 31, 1984 and this is together with the income tax assessment orders for the year ending on March 31, 1983. The Umpire has also referred to and examined the day book for three years ending March 31, 1983, the ledger for the accounting year ending March 31, 1984 and the ledger for the accounting year 1982-83. The Umpire has also referred to and examined the day book for three years ending March 31, 1983, the ledger for the accounting year ending March 31, 1984 and the ledger for the accounting year 1982-83. After examining the material it is observed that there is no material that the pending orders could be said to have been cancelled and in this context it is particularly noted that it is not even the case of the defendants referring to any written instructions cancelling the orders, but a reliance on the oral conversation conveying cancellation of the orders by the Chairman of C.S.D. to Commander Thomas, an employee of the firm. The Umpire has also recorded factual conclusion that in the absence of evidence as to the date of the meeting or any written communication of these two persons, there is no material for cancellation of the orders. 25. We find that the Umpire has considered the question of assessment of damages. Obviously the Umpire had to record that direct evidence is wanting. It is in this position reliance is placed on a statement of calculation , (Ext. A-24-a), the trading profit and loss account for the year 1983-84. The discussion in regard to these at internal page 15 of the award (page 18 of the paper book) shows consideration of whatever material that was available to reach a conclusion that the damages to be quantified would be Rs. 8,86,813. It is recorded that the above method becomes prima facie acceptable in the absence of better details. It is also particularised referring to the summary of arguments furnished by the plaintiff on February 22, 1992 that the claim in regard thereto was made only for 70 per cent. It is in the process of working out in the absence of better materials, the damages to the plaintiff are ascertained at Rs. 6,49,339. We have already stated that even if the situation is left to ourselves, we would not be able to consider the material in greater details than what has been done by the Umpire in the award dated April 2, 1994. 26. 6,49,339. We have already stated that even if the situation is left to ourselves, we would not be able to consider the material in greater details than what has been done by the Umpire in the award dated April 2, 1994. 26. Additionally, although the learned Judge is more than justified in rejecting the objections having been barred by limitation, we have considered them to find that within the limits concluding the situation even on the assumption that the objections are within time, it would not be possible to entertain them in view of the situation of finality of the reasoned award. We find them from Para.12 of the objections tendered in court on December 14, 1994. The learned counsel has taken us through the objections. It is not necessary to burden this judgment specifying the objections in the context and it would be more than sufficient to record our reaction in regard thereto. Reading the objections from Para.12 thereof, we find that the objections travel beyond the statutory limits of the enquiry. 27. The learned counsel further wanted to travel beyond the scope of the objections to make certain submissions. We do not find it necessary when they are not even specified in the objections taken. 28. Therefore, taking an overall view of the entire situation, in the light of the limits of the powers of the court under S.30 of the Arbitration Act in regard to which this court also would be circumscribed by raising of the present proceedings being an appeal therefrom, the appeal will have to be dismissed as being without merits. Accordingly the appeal stands dismissed resulting into the endorsement of the impugned order dated July 31, 1995 in I.A. No. 882/1994 in O.S. No. 247/1983 whereby the learned Judge ordered passing of a decree in terms of the award of the Umpire dated April 2, 1994. C.M.P. No. 1570/1997 also stands dismissed and the stay stands vacated as on today. Ordered accordingly.