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2001 DIGILAW 878 (BOM)

STATE OF GOA v. K. HASSAINER

2001-10-18

A.S.AGUIAR

body2001
JUDGMENT :- This appeal is against the order passed by the learned Civil Judge, Sf. Division Margao in Special Civil Suit (Arbitration) No. 63/94/ A and Civil Misc. Application No. 50/94/ A dated 16-1-1995. whereby the objections filed by the appellant to the Award made by the learned Arbitrator dated 27-1-1994 were dismissed and the A ward was made rule of the Court. The said order is impugned, inter alia, on the grounds that the findings are perverse as the learned Civil Judge has failed to take into consideration the decision of the Honble Supreme Court in the case of Raipur Development Authority etc., vs. M/s Chokhamal Contractors etc., reported in AIR 1990 SC 1426 , wherein the Constitution Bench has dealt with whether reasons are required to be given, that the learned Judge has rejected the counter claim of the appellant thereby failing to exercise jurisdiction, that the learned Civil Judge has failed to appreciate the evidence and that the findings given by the arbitrator, are perverse and without due application of mind. 2. Briefly, the facts leading to the appeal are as follows: The respondent was awarded work of providing and laying and jointing A.c. Pressure Pipe Distribution Network at Chicalim by work order dated 26/4/1983. Certain disputes and differences arose between the parties and Arbitration Suit No. 53/89/B was filed in the Court of Civil Judge, Sf. Division at Margao. Shri J. S. Pinto, Retired Superintending Engineer, P.W.D. was appointed as arbitrator by the Court. The Arbitrator made his A ward dated 27-1-1994, whereby the appellants were directed to pay to the respondents a sum of Rs. 2,88,882/- only. The said award was challenged by the appellants by filing objections dated 29-3-1994, which were registered as Civil Misc. Appln. No. 50/1994/A in Special Civil Suit No. 63/94/A before the Court of Civil Judge. Sf. Division, Margao. By impugned order dated 16-1-1995, the learned trial Judge, dismissed the said objections and confirmed the A ward. The appeal is from the said order dated 16-1-1995, challenging the order rejecting the objections to the Award. 3. When the appeal came up for hearing, this Court found that there was prima facie substance in only one of the objections raised i.e. no specific reasons were given by the arbitrator to explain the quantification of the amounts of money awarded to the respondent under various claims. 3. When the appeal came up for hearing, this Court found that there was prima facie substance in only one of the objections raised i.e. no specific reasons were given by the arbitrator to explain the quantification of the amounts of money awarded to the respondent under various claims. The award was, therefore, remitted to the Arbitrator by oral Order dated 28-11-1997 directing him to give his findings with regard to the figures awarded by him and to submit his additional report in that connection. The Arbitrator thereafter filed his supplementary Award/ Additional Award dated 10-2-1998 in this appeal and the appellant thereafter filed additional objections to the supplementary award dated 10-2-1999 which objections have been registered under Misc. Civil Application No. 109/99. 4. It is contended by learned Advocate for the appellant that the grounds impugning the order of the lower Court and consequently, the award of the learned Arbitrator are within the scope of Section 30 of the Arbitration Act, 1940. It is contended that the grounds made out are within the parameters of law laid down by the Honble Supreme Court in the case of Raipur Development Authority, etc. vs. M/s Chakhamol Contractors, etc., (supra) wherein the Supreme Court has dealt with the question whether reasons are required to be given, as follows: The Arbitrator or Umpire is under no obligation to give reasons in support of the decision reached by him unless the arbitration agreement or in the deed of submission is required to give such reasons and if the Arbitrator or Umpire chooses to give reasons in support of his decision, it is open to the Court to set aside the award if it finds that an error of law has been committed by the Arbitrator or Umpire on the basis of record on going through such reasons". It is pointed out that in the instant case, Clause 25 of the Arbitration Clause specifically provides that the arbitrator shall give reasons for the award and, therefore, it was obligatory on the part of the learned Arbitrator to give reasons. It is submitted that the arbitrator while making the award, committed error on the face of the award and the record and has given no reason for granting the claims nor have the delays been quantified and that there are also illegalities committed by the Arbitrator. 5. It is submitted that the arbitrator while making the award, committed error on the face of the award and the record and has given no reason for granting the claims nor have the delays been quantified and that there are also illegalities committed by the Arbitrator. 5. It is pointed out that in objections filed before the lower Court to the award dated 27-1-1994, it was specifically stated that the reasons which are given are perverse and it is submitted that there are errors apparent on the face of the award. However, the objections raised before the learned Civil Judge, Sr. Division, Margao were dismissed and the award was made Rule of the Court by impugned order dated 16-1-1995. It is further pointed out that the grounds challenging the order are set out in Memorandum of Appeal which are within the parameters of law laid down by the Supreme Court. Relying upon the case of Raipur Development Authority it is contended that if reasons are given, it is open to the Court to set aside the award if it finds that errors of law have been committed by the learned Arbitrator or Umpire on the face of the record on going through such reasons. As such, earlier this Court by order dated 28-11-1997 referred back the matter to the Arbitrator to file report/clarification observing that the Arbitrator had not apportioned the delay, nor had he quantified the same and in the absence of this exercise on his part, the various amounts that he had fixed under different headings in his award, could not be understood at all. While referring back the matter to the Arbitrator, this Court required him to give specific reasons for arriving at a particular figure on the basis of the earlier findings as to the delays. 6. In pursuance of the directions of this Court, the Arbitrator filed his supplementary Award dated 10-2-1998. In the said supplementary Award, the arbitrator came to a finding that there was a delay of 26 and half months, out of which he attributed the delay of two and half months to the respondent and the remaining 24 months to the appellants. Further the Arbitrator has enlisted four items of delay. In the said supplementary Award, the arbitrator came to a finding that there was a delay of 26 and half months, out of which he attributed the delay of two and half months to the respondent and the remaining 24 months to the appellants. Further the Arbitrator has enlisted four items of delay. As against item No.1, he came to the conclusion that there was delay of 21 months; as against item No.2, he came to the conclusion that there was delay of six months; as against Item No.3, the delay of four months and as against item No.4, there was delay of 14 months. Thus the total delay quantified by the arbitrator in all the four items comes to 45 months. It is pointed out that some delays were overlapping and some were running consecutively and therefore, the arbitrator felt it was not possible to sum up all these delays arithmetically and held taking an over all view that there was delay of 26 and half months, out of which 24 months delay was attributed to the appellants and two and half months delay to the respondent. It is submitted by the appellants that though reasons have been given by the arbitrator quantifying the delays, the exercise done by the Arbitrator is totally arbitrary. 7. The learned Arbitrator on the basis of some documents produced before him, in the supplementary award came to a finding that the total delay was of 45 months in respect of four items and that the arbitrator has not specified where the delays are overlapping or running consecutively. Therefore, the arbitrator has arbitrarily fixed the delay of 26 and half months. It is pointed out that the appellants have not stated or given any reasons as to how two and half months are only attributed to the respondent and 24 months delay is attributed to the appellants. It is contended that the arbitrary exercise is not permissible as the compensatory claims are based upon these delays which constitute breaches of the contract under Section 73 of the Contract Act. Thus, the arbitrator has committed error apparent on the face of the award. It is, therefore, submitted that the quantification of delay done by the arbitrator and the compensatory claims Nos. 2, 3, 4 and 5 awarded which are based upon breaches are liable to be set aside. 8. Thus, the arbitrator has committed error apparent on the face of the award. It is, therefore, submitted that the quantification of delay done by the arbitrator and the compensatory claims Nos. 2, 3, 4 and 5 awarded which are based upon breaches are liable to be set aside. 8. Learned Advocate for the appellants has also drawn my attention to the objections filed before the trial Court in order to show how the Arbitrator misdirected himself in appreciating the claim which were filed before the trial Court. 9. On the other hand, it is the contention of the learned Advocate for the respondent that the objection filed before the trial Court as well as before this Court are without any substance and beyond the scope of Section 30 of the Arbitration Act, 1940. Section 30 of the Act provides grounds for setting aside the award as follows: An A ward 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 arbitration proceedings have become invalid under Section 35; (c) that an award has been improperly procured or is otherwise invalid; It is contended that none of the aforesaid grounds for setting aside the award have been made out and, therefore, the award needs no interference. Reference has been made by the learned Advocate for the Respondents to various decisions of the Supreme Court, namely on the points (a) the arbitrator is the final judge of all questions both of law and fact; (b) the arbitrator is the sole judge of the quality as well as quantity of evidence; (c) it is not open to the Court to re-examine and re-appreciate the evidence considered by the arbitrator to hold that the conclusion reached by the arbitrator is wrong; (d) the Court cannot sit in appeal over the views of the arbitrator; (e) an arbitrator is not required to give a detailed judgment while rendering even a reasoned award; and (f) where two views are possible, the Court is not justified in interfering with the award by adopting its own interpretation. 10. 10. It is contended by learned Advocate for the respondents that objections dated 29-3-1994 filed by the appellants challenging the award do not fall within the scope of Section 30 of the Act as all the said objections relate to the merits of the case and the same cannot be reagitated before the Civil Court. The objections concerning the lack of reasons in the quantification of the sums of money awarded has already been made good by the arbitrator after submission of the Award by filing the supplementary award/additional award dated 10-2-1998. It is also the contention of the respondents that Misc. Civil Appln. No. 109/99 filed pursuant to the supplementary award, is barred by limitation as the said application proposes to constitute a petition of objections to the supplementary award/additional award made by the sole arbitrator. It is pointed out that under Article 119(b) of Limitation Act, 1963 an application for setting aside Award has to be made within 30 days from the date of service of the notice of the filing of the award. In the present case, the said award was made on 10-2-1998. The case came up on board on 20/3/1998 when the parties were informed of the filing of the said A ward. On 20-4-1998, the appellants sought time for filing objections to the said A ward and objections were filed on 18-2-1999, that is about 10 months after expiry of the period of limitation. No condonation of delay was sought and hence, M. C. A. 109/99 has to be dismissed as being beyond limitation. It is further contended that the said objections are without merit. The supplementary Award dated 10-2-1998 discloses that the learned Arbitrator has given detailed and relevant reasons in support of each claim awarded by him. The arbitrator is an experienced person in the construction industry and it was precisely on account of his technical expertise that he came to be appointed as arbitrator in the case. It is well settled that a Civil Court will not interfere with the award of a technical expert unless there are compelling and glaring reasons to do so. In the present case, the arbitrator has admittedly considered the materials produced before him and the rival contentions of the parties and made his decision. Such an award cannot be challenged under Section 30 of the Arbitration Act, 1940. In the present case, the arbitrator has admittedly considered the materials produced before him and the rival contentions of the parties and made his decision. Such an award cannot be challenged under Section 30 of the Arbitration Act, 1940. Reliance is placed on the observations made by the Supreme Court in the case reported in AIR 1997 S.C. 1324 which read as follows: " ... it is difficult to give an exact definition of the word reasonable. Reason varies in its conclusion according to the idiosyncrasies of the individual and the time and circumstances in which he thinks. The decision of a judge sitting as a jury usually determines what is reasonable in each particular case. Therefore, where reasons germane and relevant for the Arbitrator to hold in the manner he did have been indicated, it can not be said that the reasons are unreasonable." It is thus the contention of the respondent that the objections dated 20-3-1994 filed before the arbitrator as well as the arbitration proceedings filed in this Court, challenging the A ward do not fall within the scope of Section 30 of the Act and all such objections related to the merits of the case cannot be reagitated before the Civil Court. The objections concerning the lack of reasons in the quantification of the sums of money awarded has already been made good, after remission of the award by making supplementary award dated 10-2-1998 filed in this Court by the arbitrator. 11. Specifically dealing with the two arguments of learned Advocate for the appellants namely that (i) the Award of Rs. 18,000/- under claim No.5 overlaps the award made under claim No.2, and (ii) that the arbitrator could not have granted interest at the rate of 19% for the pre-arbitration period, it is contended that these objections could not be entertained and they are without substance. It is pointed out that the objection of overlapping was not taken up even by implication in the petition of objections dated 29-3-1994 filed by the appellants in the trial Court. Therefore, such objection could not be entertained orally, much less when made for the first time in the appellate Court. 12. In 1991(1) ArbLR. It is pointed out that the objection of overlapping was not taken up even by implication in the petition of objections dated 29-3-1994 filed by the appellants in the trial Court. Therefore, such objection could not be entertained orally, much less when made for the first time in the appellate Court. 12. In 1991(1) ArbLR. 97 (SC), the Supreme Court has laid down: "There is a presumption of validity of award and the objection not taken specifically must be ignored" In AIR 1993 SC 864 , the Supreme Court held that an objection not taken before the Arbitrator cannot be taken for the first time in Court. Further on the question of possible overlapping of the claims made by respondent, the same has been dealt with by the learned Arbitrator, who has specifically observed as follows: " .. .In order to assess the overall effect of these delays relating to each breach (of contract) on the total delay that has occurred in the completion of the work, it has to be borne in mind that some delays are overlapping with each other while some are running consecutively. Therefore, it is not possible to sum these delays arithmetically. After taking an overall view of the matter. in the light of the order of items of work and operations to be followed while executing a work of this type of laying of pipeline, I have come to the conclusion that out of the total 26 and half months of delay in the completion of the work, 24 months of delay are definitely attributable to the Respondent and the rest 2 and half months to the Claimant." This finding is given by the arbitrator in the supplementary award filed pursuant to the directions of this Court. Thus, the learned Arbitrator has taken into account all the factors and apportioned the delay after taking an over all view of the matter. It must not be forgotten that the Arbitrator appointed was technically qualified to give his findings. The Court was, therefore, justified in not interfering with the conclusion drawn by the arbitrator. 13. Regarding the objection concerning pre-arbitration interest, it must be noted that no such objection was taken before the trial Court and hence, such an objection could not be also taken in the appeal. The Court was, therefore, justified in not interfering with the conclusion drawn by the arbitrator. 13. Regarding the objection concerning pre-arbitration interest, it must be noted that no such objection was taken before the trial Court and hence, such an objection could not be also taken in the appeal. In support of this contention, learned Counsel for the respondent has placed reliance on the case reported in 2000(3) Mh.L.J. 730 = 2000(3) Bom.C.R. 360 . There can be no dispute about proposition of law laid down in the said Judgment that the award of pre-arbitration interest is covered by Section 3 of the Interest Act, 1978. However, it is no where laid down that any particular rate of interest has to be awarded in each and every case. The question of rate of interest applicable would depend upon the facts of each case. In the case referred to above, rate of 10% per annum was agreed to by the parties. Section 30 of the Interest Act 1978 does not fix any ceiling on the rate of interest to be awarded. In the present case interest has been awarded under claim No. 11 and the learned Arbitrator has given specific reasons and relied upon specific material in awarding interest at the rate of 18%. The said materials are in the form of documents of Nationalized Banks and, therefore, relevant for determining the rate of interest to be awarded for the pre-arbitration period. In the case reported in 2000(1) Arb.L.R. 505 (SC), the Supreme Court has specifically approved the award of interest at the rate of 18% per annum for the pre-arbitration period. At para 18 of the said Judgment, the Court held as follows: "Unless there appears to be a mistake on the face of the award and the documents appended or incorporated thereto which form part of the award, it cannot be set aside even with respect to interest part of it". 14. Regarding the preliminary objection of limitation under Article 119(b) of the Limitation Act, the learned trial Court has held that the application of the respondent is well within the limitation time set out under Section 119(b) of the Limitation Act. A plea of limitation has been raised in this Court in connection with the supplementary award passed by the arbitrator. It must be noted that the supplementary award cannot be strictly called a supplementary award. A plea of limitation has been raised in this Court in connection with the supplementary award passed by the arbitrator. It must be noted that the supplementary award cannot be strictly called a supplementary award. The same is a misnomer in as such as the arbitrator was directed by this Court to submit Report to the Court to clarify/give specific reasons for arriving at a particular figure on the basis of earlier findings as to the delay, so that the "matter could be put to an end". The arbitrator has, accordingly, submitted his Report which he has referred to as supplementary award. The contention of the learned Advocate for the respondent is that the objections which have been filed by the appellant are also barred by limitation as the same have been filed after expiry of 10 months from the date of notice dated 20-3-1998 to the appellants of the filing of the report/supplementary award, which was filed on 10-2-1998. However, I do not see any substance in this argument as the supplementary award/report was filed in the pending appeal and pursuant to the directions given in the said appeal. The question, therefore, of delay in filing objections does not arise as the appellants filed the objections after the appeal again came up for hearing. 15. A perusal of the impugned order shows that the learned trial Judge has appreciated the award and held that the award is a reasoned award. However, the trial Court was of the opinion that it could not go behind the award to find out "what was the process of mind of the arbitrator to arrive at his conclusion", as it is well settled that the arbitrator is the sole judge of the facts and law involved in the case before him and, it is not open to the Court to re-examine and reappreciate the evidence already considered by the arbitrator. In the present case, the arbitrator has given a reasoned award, and there is no error on the face of the record pointed out by the trial Court. The trial Court has held that the objection of the appellants that there are errors of law on the face of the award must be rejected. In the present case, the arbitrator has given a reasoned award, and there is no error on the face of the record pointed out by the trial Court. The trial Court has held that the objection of the appellants that there are errors of law on the face of the award must be rejected. The trial Court also held that the objection that the award is liable to be set aside on the ground of non-consideration of the evidence and submissions of the parties must be rejected as the Arbitrator has specifically recorded in the Award that he had carefully considered the claims and counter claims, oral evidence adduced by the parties, written submissions and citations filed by the parties and the arguments advance by the parties. Admittedly the appellants had not filed any objections to overlapping of claims before the Trial Court which have been filed in the present appeal. This is an appeal against the order of the trial Court which has considered all the objections filed before it. The trial Court has upheld the findings of the Arbitrator and found no reason to interfere with them. 16. At the time of hearing this appeal, this Court felt that a part of the award required clarification, so far as the question of quantification of the period of delay is concerned and accordingly, this Court remanded the matter to the arbitrator with a view to getting clarification from the arbitrator for arriving at a particular figure on the basis of earlier findings as to the delay and with a hope that the "matter could be put to an end". It is, therefore, now too late in the day for the appellants to canvass arguments on specific claims which have been dealt with by the arbitrator in his award and which have not been specifically challenged by the appellants before the trial Court. 17. In the circumstances, the appeal is without merit and the same is rejected. Appeal dismissed. Appeal dismissed.