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2001 DIGILAW 223 (CAL)

Union of India v. Prince Tiles

2001-04-19

ASOK KUMAR GANGULY, PRANAB KUMAR CHATTOPADHYAY

body2001
JUDGMENT 1. Heard Counsel for the parties. This appeal arises out of a judgment and order dated 2nd December, 1999 passed by a learned Single Judge of this Court on an application filed by the appellant under Sections 30 and 33 of the Arbitration Act, 1940 for setting aside the award The award in this case is a speaking award dated 18th January, 1999 by a retired Judge of this Hon'ble Court. 2. It is not in dispute that by a letter dated 29th August, 1997 passed by a learned Judge of this Court, the Arbitrator was appointed to adjudicate the disputes and differences between the parties. The said order was passed by the learned Judge on a petition under Sections 5, 11 and 12 of the Arbitration Act, 1940. By the said order, the learned Judge was pleased to revoke the authority of the previously appointed departmental Arbitrator and appointed Justice L.M. Ghosh, a retired Judge of this Court as arbitrator. 3. The following issues were framed before the learned Arbitrator for decisions :- 1. Whether the rescission of the contract by the respondent is justified or not? 2. Whether the claims of the claimant are admissible on facts and according to law? If so, to what extent and in respect of what items? 3. Is the claimant entitled to any interest? If so, for which period and to what extent? 4. Is the claimant entitled to get any costs of this proceeding? 5. Are the items of counter-claim of the respondent admissible and justified? If so, to what extent and in respect of which items? 6. Is the respondent entitled to get any interest? If so, for which period and to what extent? 7. Is the respondent entitled to get any cost of this proceeding? 8. To what relief or reliefs, if any, the parties are entitled to ? 4. The learned Counsel appearing for the appellant has raised many points assailing the award of the arbitrator. His first point has been that the award of the arbitrator on the first issue, namely, that the rescission of the contract by the respondent was justified, is erroneous. The learned Counsel further submitted that in arriving at the said finding, the learned Arbitrator has not given any decision on the question of handing over of the site by the appellant to the claimant. The learned Counsel further submitted that in arriving at the said finding, the learned Arbitrator has not given any decision on the question of handing over of the site by the appellant to the claimant. We have considered the said finding of the arbitrator which is well reasoned and we find that there is no reason for this Court to interfere with the same. 5. But, the learned Counsel for the appellant has raised a rather substantial question about some portions of the award of the arbitrator relying on Clause 18 of the Special Conditions of Contract between the parties. For proper appreciation of that point, this Court sets out hereinbelow the said Clause 18 of the Agreement :- "18. Idle Labour-No claim whatsoever for idle labour, additional establishment, hire charges of tools and plants etc., will be entertained under any circumstances." (underlined for emphasis) 6. Relying on the said clause, learned Counsel submits that the learned Arbitrator cannot make any award in terms of Claim Nos. 7 and 8 of the Statement of Claims urged by the claimant. Claim No.7 was a claim in respect of idle labour and Claim No.8 was in respect of claim relating to infructuous office expenditure. 7. This Court finds that this is the only substantial point raised in this appeal. 8. This Court has heard Counsel for both the parties in respect of that aspect of the award. This Court finds that this is a reasoned award, the arbitrator has given elaborate reasons while allowing the said claim, namely, Claim No.7. In doing so, the arbitrator has discussed the claim of the claimant and held that, "if there was no delay or default on the part of the respondent (the appellant herein) then the claimant, under the contract, could not claim any amount on account of idle labour. That is to say, when there was idle labour in normal course, and not account of default of the respondent, the claim of the claimant would be barred." After arriving at the said finding, the learned Arbitrator granted the claim, inter alia, holding that in the instant case delay was caused by the appellant and the learned Arbitrator further held that Clause 18 of the contract extracted above does not cover such a situation. This Court finds that in making the aforesaid finding the learned Arbitrator has travelled beyond his jurisdiction. 9. This Court finds that in making the aforesaid finding the learned Arbitrator has travelled beyond his jurisdiction. 9. It is well-settled that an arbitrator, while giving his award, Cannot travel beyond the clauses in the contract from which he derives his jurisdiction. In the instant case, ‘a mere look' at Clause 18 of the Special Conditions of Contract makes it clear that no claim whatsoever of idle labour, establishment, hire charges of tools and machinery could be entertained under any circumstances. The said clause is very clear and needs no interpretation. This Court finds that the award given by the learned Arbitrator in respect of Claim Nos. 7 and 8 which are claims for idle labour and infructuous office expenditure the arbitrator has travelled beyond the contract and/or acted without jurisdiction. In support of the aforesaid contention, the learned Counsel for the appellant has drawn our attention to a recent judgment of the Supreme Court in the case of (1) Steel Authority of India v. J.C. Budharaja, Government and Mining Contractor reported in 1999 (8) SCC 122 . In Paragraphs 19 to 22 of the said judgment, the learned Judges of the Hon'ble Supreme Court after discussing the case law on the point made it very clear that where the arbitrator acts contrary to a specific bar or prohibition in the contract, the arbitrator acts without jurisdiction., It is well-settled that a Court hearing an appeal arising out of a proceeding for setting aside the award will not act as an Appellate Court and will not make any interpretation of the contract but where the Court finds by a mere look at the contract that the Arbitrator has proceeded contrary to the provisions of the contract, in such a case, the Court has the authority to set aside the award which has been passed by ignoring the specific bar in the contract. In the facts of the case, the principle decided in the aforesaid decision of Budharaja (supra), are attracted and follows those principles, this Court set aside the award of the arbitrator against Claim Nos. 7 and 8. 10. Learned Counsel appearing for the claimant has contended that even in a speaking award the Court will not substitute the view taken by the arbitrator where two views are possible. 7 and 8. 10. Learned Counsel appearing for the claimant has contended that even in a speaking award the Court will not substitute the view taken by the arbitrator where two views are possible. We are of the opinion that in the instant case two views are not possible and the view taken by the arbitrator is a view which has ban taken ignoring the specific prohibition contained in the Special Conditions of Contract. So, certainly that is not a possible view and that view of the arbitrator cannot be taken within the four corners of the contract. Acceptance of the said view of the arbitrator a mounts amending the Special Conditions of Contract between. No Court or Arbitrator has the power to do so. 11. It. appears from the award that the learned Arbitrator in support of his view has relied on the decision of a learned Single Judge of this Court in the case of (2) Deo Kumar Soraf v. Union of India reported in 1988 (2) CLJ 325 . We have perused the said judgment but we do not see how that judgment could lend assurance to the view taken by the learned Arbitrator. In fact, nothing like Clause 18 which has been extracted above was existing in the said case and the ratio in the said case has no application in the facts and circumstances of this case. 12. Learned Counsel for the claimant has relied on a decision of the Supreme Court in the case of (3) M/s. Sudarsan Trading Co. v. Government of Kerala & Anr. reported in AIR 1989 SC 890 . The award passed in the said case was a non-speaking award. Learned Counsel has placed reliance on Paragraph 31 of the said judgment. In that decision, the learned Judge after referring to various decisions observed in Paragraph 31 of the said judgment, as follows: "............But, in the instant case, the Court had examined the different claims not to find out whether these claims were within the disputes referable to the arbitrator, but to find out whether in arriving at the decision, the arbitrator had acted correctly or incorrectly. This, in our opinion, the Court had no jurisdiction to do, namely, substitution of its own evaluation of the conclusion that the arbitrator had acted contrary to the bargain between the parties." 13. This, in our opinion, the Court had no jurisdiction to do, namely, substitution of its own evaluation of the conclusion that the arbitrator had acted contrary to the bargain between the parties." 13. We act in respectful agreement with the view taken by the learned Judge. In the instant case, we are merely examining whether Claim Nos. 7 and 8 could be awarded by merely looking at the contract and by merely looking at the contract we have reached the conclusion as pointed out above. In this case, we are not trying to find out whether the arbitrator acted correctly or incorrectly on an interpretation of the contract. 14. The other judgment which has been cited by the learned Counsel appearing for the claimant, namely, the decision in the case of (4) B.V. Radhakrishna v. Sponge Iron India Ltd., 1997(4) SCC 693 , is not applicable in the facts and circumstances of this case. In that case, the learned Judge of the Supreme Court observed that the High Court cannot exercise its power for setting aside an award by substituting its own view in place of arbitrator's view nor can the High Court function as an appellate authority. In the instant case, we not undertaking either of the above exercises indicated by the Apex Court. The learned Counsel also relied on a decision of the Supreme Court in the case of (5) Hindustan Construction Co. Ltd. v. Governor of Orissa & Ors. reported in 1995 (3) SCC 8 , which is also reported in (6) AIR 1995 SC 2189 . As a matter of fact, the principles laid down in Hindustan (supra), have been reiterated in Radhakrishna. Since the judgment of this Court in the instant case is not given on the aforesaid basis, the principles laid down in the case of Hindustan Construction Co. Ltd. are not at all applicable in the facts of this case. We make it clear that in the instant case, the view taken by the learned Arbitrator cannot be acceptable. As such the ratio in the aforesaid cases are not at all attracted. 15. For the reasons aforesaid, we cannot affirm the award of the learned Arbitrator in respect of Claim Nos. 7 and 8. Since the award of the arbitrator is a reasoned one and severable we strike out the bad portion but retain the good portion. As such the ratio in the aforesaid cases are not at all attracted. 15. For the reasons aforesaid, we cannot affirm the award of the learned Arbitrator in respect of Claim Nos. 7 and 8. Since the award of the arbitrator is a reasoned one and severable we strike out the bad portion but retain the good portion. We, therefore, affirm the award save and except the award against Claim Nos. 7 and 8. That portion of the award stands set aside. Rest of the award is affirmed. 16. We are told that in the instant case, on the very day when the application for setting aside the award was dismissed, decree was passed in terms of the award. An execution proceeding has also been initiated but the said execution proceeding has been stayed by the Appeal Court on certain terms. Since the award stands modified in view of this judgment, the decree is also modified in terms of this judgment. Let there be a modified decree in terms of this judgment. In view of this decree being modified, the interests may be further recalculated on the same rate as awarded by the arbitrator. This Court further directs that the claimant is entitled to a further interest at the rate of 10% per annum from the date of publication of the said award until realisation. The appeal is allowed to the limited extent indicated above. 17. Till the amount in terms of this judgment and modified decree is paid to the claimant, the appellant is directed not to withdraw money which they deposited in terms of the Appeal Court's order dated 8th of August, 2000. 18. Let the decree be drawn up expeditiously. Let a xerox copy of this judgment, countersigned by the Assistant Registrar of this Court be given to the parties upon their undertaking to apply for and obtain certified copy of the same as expeditiously as possible.