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2002 DIGILAW 687 (CAL)

State of West Bengal v. Rakhal Chandra Banerjee

2002-11-07

DILIP KUMAR SETH, SADHAN KUARM GUPTA

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JUDGMENT Seth, J. : In this appeal the judgment and decree dated 26th May, 2000 passed in O.C. (Arb.) Suit/Case No. 59 of 1997 and Misc. Case No.7 of 1998 by the Learned Civil Judge (Senior Division), Siliguri have since been challenged; This Appeal arises out of a decree making the award Rule of the Court after refusing to set aside the award. 2. Mr. Amaresh Bhattacharyya, however, points out that this appeal is an appeal under Section 39(vi) of the Arbitration Act, 1940 and not an appeal under Section 17 of the 1940 Act. However, the Memorandum of appeal appears to be misleading. As prayed for, we grant leave to Mr. Bhattacharyya to amend the preamble of the appeal to confine the appeal within the meaning of Section 39(vi) of the 1940 Act. We grant this leave on the ground that the order is a composite on which proceeds to make the award a Rule of the Court, simultaneously, after refusing to set aside the award. 3. Mr. Bhattacharyya had contended that according to the terms of the agreement, no compensation could be awarded. Therefore, the grant of compensation is wholly without jurisdiction and could not be comprehended within the scope of the dispute arising out of the contract. Therefore, the arbitrators had misconducted themselves in awarding compensation, which is beyond their jurisdiction. This point was, however, sought to be supported by the learned Counsel for the respondent that because of the delay, which emanated from the failure on the part of Mr. Bhattacharyya's client the claimant is entitled to compensation. 4. From the pleadings as also from submissions made by Mr. Bhattacharyya and the reference, which we have perused, it appears that the facts are not in dispute. That the work was delayed due to laches, failure and negligence on the part of the respondents, are not being disputed. Therefore, it appears that the claimant has made claim in respect of compensation on account of escalation in cost of price and delay in completion of the work. Admittedly, the claimant has received all his bills raised by him. It is only a claim of compensation on account of escalation or increase in price that has been sought to be made in claim No.1 as has been awarded in the award. 5. Admittedly, the claimant has received all his bills raised by him. It is only a claim of compensation on account of escalation or increase in price that has been sought to be made in claim No.1 as has been awarded in the award. 5. The answer to this point can be found out from Clause 29 of the agreement at page 9 of Volume 3 of the Paper, Book, which runs as follows: “29. Any dispute that shall arise out of this contract the settlement of which is not therein provided for shall be decided by two arbitrators one to be appointed by each party or by an umpire to be appointed by arbitrators before proceeding with the reference, and the provisions of the Act X of 1940 as amended to date shall apply to any such reference. 6. The above clause clearly indicates that a dispute arising out of the contract, the settlement whereof is not provided for in the agreement, is to be referred to the arbitrator as provided in Clause 29. Admittedly, the dispute arose out of the contract. Admittedly, the provisions' of the contract do not provide for it. Therefore, the claim for compensation squarely comes within the scope of the conditions laid down under Clause 29. As such, the arbitrators had jurisdiction to entertain the claim. Therefore, grant of compensation in claim No.1 was not outside their jurisdiction. As such, there is no question of considering that the arbitrators had misconducted themselves in allowing in part the claim No. 1 made by the claimant. 7. Mr. Bhattacharyya, however, required us to look into the materials and find out that even on the basis of the materials the amount awarded could not have been awarded. But we are unable to concede to this proposition in view of the decision in Indu Engineering & Textiles Ltd. v. Delhi Development Authority, 2001 (5) SCC 691 and Ispat Engineering & Foundry Works, B.S. City, Bokaro v. Steel Authority of India Ltd., B.S: City, Bokaro, 2001 (6) SCC 347 . In these decisions the scope and jurisdiction that can be gone into in an appeal under Section 39, particularly, in respect of an application under Section 30 was circumscribed within the scope provided in the section. The Court is not supposed to enter into all these questions. It can neither re-apprise the evidence nor re-examine the same. In these decisions the scope and jurisdiction that can be gone into in an appeal under Section 39, particularly, in respect of an application under Section 30 was circumscribed within the scope provided in the section. The Court is not supposed to enter into all these questions. It can neither re-apprise the evidence nor re-examine the same. The award of the arbitrator is otherwise final and conclusive unless any of the ingredients for setting aside the award is satisfied in terms of the provisions of the Statute. 8. An appeal cannot travel beyond the scope of the original proceeding out of which the appeal arises. Clause (vi) of Section 39 provides for an appeal against an order setting aside or refusing to set aside an award. An award can be set aside under Section 30 of the 1940 Act. Therefore, when an appeal is preferred against an order passed under Section 30 of the 1940 Act, the scope is limited within the confines of Section 30. Section 30 provides for setting aside of an award on six grounds viz: (a) that the arbitrator or umpire has misconducted himself; (b) or has misconducted the proceedings; (c) the award was passed after the arbitration is superseded by an order of the Court; (d) or the arbitration proceeding has become invalid under Section 35; (e) or the award was improperly procured; (f) or the award is otherwise invalid. In the present case, we are not concerned with the grounds mentioned in clauses (b), (c), (d), (e) and (f) above. It is not the case of Mr. Bhattacharyya that any of the grounds referred to in clauses (b), (c), (d), (e) and (f) above is attracted in the present case. The only ground on which the award is assailed is that the arbitrator has misconducted himself. 9. The scheme of the 1940 Act indicates that the legislature had intended to make the arbitrator a final arbiter of the dispute between the parties. Therefore, it had restricted the grounds on which an award could be set aside as is apparent from Section 30 of the Act. The award has not been made open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate facts. Therefore, it had restricted the grounds on which an award could be set aside as is apparent from Section 30 of the Act. The award has not been made open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate facts. It is intended to attach finality to the decision of the arbitrator, who has been made the Judge both of fact and law referred to him. Unless the award is perverse or erroneous on the face of the record, it cannot be set aside. It is not open to the Court to reassess the evidence in order to ascertain if the arbitrator has committed any error or to decide the question of adequacy of such evidence. The Court cannot sit on appeal over the conclusion of the arbitrator by re-examining and re-appraising the evidence considered by the arbitrator. In support of the above proposition, we may gainfully refer to Eastern and North East Frontier Railway Co-operative Bank Ltd. v. M/s. B. Guha and Co., AIR 1986 Cal. 146 and S. Sarabjit Singh v. State of Punjab and Another, AIR 1985 P&H 179 . 10. It is not open to the Court to reverse a decision in an appeal on the ground that as a Trial Court, it would have come to a different conclusion on the materials produced before the Trial Court. If the discretion is exercised reasonably and in a judicious manner, the fact that the Appeal Court would have taken a different view would not justify interference by the Appeal Court with the Trial Court's exercise of discretion. It is not open to the Appellate Court to substitute its own views unless it appears to the Appellate Court that the Trial Court had acted unreasonably or capriciously or has ignored relevant fact. In support of this proposition, we may refer to the decision in UP. Cooperative Federation Ltd. v. Sunder Brothers, AIR 1967 SC 249 and Union of India v. Bungo Steel Furniture Private Ltd., AIR 1967 SC 1032 . 11. In a proceeding to set aside an award, the Appellate Court cannot sit on appeal over the conclusion of the arbitrator by re-examining and reappraising the evidence considered by the arbitrator and hold that the conclusion reached by the arbitrator is wrong. 11. In a proceeding to set aside an award, the Appellate Court cannot sit on appeal over the conclusion of the arbitrator by re-examining and reappraising the evidence considered by the arbitrator and hold that the conclusion reached by the arbitrator is wrong. It was so held in Union of India v. Kalinga Construction Company, AIR 1971 SC 1646 : 1970 (2) SCC 861 . 12. Therefore, having regard to the contention of the respective parties, we are unable to find any reason to interfere with the decision in respect of the claim No.1. 13. The claim No.2 consists of loss of profit due to uneconomical working. On this claim a sum of Rs. 6,50,000/- has since been awarded. The reason that has been given to support the award records that the claimant contractor lost a part of his profit directly and approximately as a result of the time overrun. Therefore, the amount awarded would be just compensation for this loss. In our considered view, this cannot form part of the reference that was referred to the Arbitrators which pertains to compensation for a delayed process. In fact, the claim No.2 can very well be included in Claim No. 1 which is the compensation for the delayed construction. It is, in fact, for the same purpose the compensation is grated twice over. Therefore, in our view, the arbitrators had misconducted themselves in exceeding their jurisdiction in awarding the amount on Claim No.2 which cannot be segregated from Claim No.1. In fact, Claim No. 1 overlaps Claim No.2. Whether the working was economical or not is a question, which is subjective, not objective. This Court cannot determine the subjectivity of such question. We do not think that this Claim No.2 could be included within the reference. Therefore, the award on this count seems to be without jurisdiction and as such the same is disallowed. 14. So far as Claim No.3 is concerned, we do not find any reason to interfere in view of the fact that on account of delay the claimant had to maintain establishment for the period that was overrun. Though Mr. Bhattacharyya had contended that this also includes uneconomical working, but this use of the expression ‘uneconomical working’ is not commensurate with the claim made, which is related to the maintenance of establishment for the overrun period. Though Mr. Bhattacharyya had contended that this also includes uneconomical working, but this use of the expression ‘uneconomical working’ is not commensurate with the claim made, which is related to the maintenance of establishment for the overrun period. Therefore, we are not inclined to interfere with this part of the award. 15. No cross-objection or cross-appeal having since been filed, though argued, we are unable to persuade ourselves to deal with Claim No.4, which has since been denied by the Arbitrators. The respondent having not filed any cross-appeal or cross-objection against Claim No.4, it is not open to the claimant respondent to agitate the said point. 16. So far as claim No.5 is concerned, it relates to interest. The decision in Jena's case (Executive Engineer, Irrigation Division, Orissa v. B. Jena., 1998 (1) SCC 418) was overruled by the subsequent decisions. In the case of State of Orissa v. B.N. Agarwal, 1997 (2) SCC 469 and in the case of Irrigation Department, Government of Orissa v. S.C. Roy, 1992 (1) SCC 508 , the Apex Court had recognized the jurisdiction of the Arbitrator to grant interest pendente lite, viz: from the date of reference to the date of the award as well as that after the award till the date of the decree. However, in none of these cases the interest pre-reference was dealt with conclusively. In view of conflicting approach in those decisions, in the case of Executive Engineer, Dhenkanol Irrigation Division, Orissa v. N.C. Budhiraj, 1999 (9) SCC 514 , the Apex Court had referred this question to a larger Bench. In the case of Jagadish Roy v. Union of India, 1999(3) SCC 257 , the interest was distinguished in four categories. The arbitrator's power to grant interest on those counts has since been recognized However, the interest with regard to the pre-reference period is still subsisting having been referred to a larger Bench in subsequent judgment in the case of N.C. Budhiraj (supra). 17. In the present case, however, we are not concerned with pre-reference interest. So far as the jurisdiction to grant interest for the period between the date of reference and the date of the award is concerned, it cannot be questioned. We are not inclined to interfere with the grant of interest for the period between the dates of entering into the reference till the date of the award and till decree. So far as the jurisdiction to grant interest for the period between the date of reference and the date of the award is concerned, it cannot be questioned. We are not inclined to interfere with the grant of interest for the period between the dates of entering into the reference till the date of the award and till decree. Though interest was awarded from the date of the award till the date of realization, which is not permissible, as mentioned, yet that will not make any difference, since the Court had granted interest from the date of the decree. Therefore, that part of the award is to be read as interest granted for the period from the date of entering into the reference till the date of the decree. That part of Claim No.5 stands modified to that extent. 18. Mr. Bhattacharyya, however, contended that the rate of interest was high. But no such ground has since been taken in the Memorandum of Appeal. Therefore, we are unable to allow him to argue this question. Therefore, nothing comes to interfere with the rate of interest as awarded by the Arbitrators. 19. In the decree the Court has awarded interest at the rate of 18% per annum from the date of the decree. Admittedly, this order was passed in 2000. Now that the rate of interest has since fallen down, we do not think that the Court could grant interest at the rate of 18% per annum simple. It ought to have been at the rate of 12% per annum simple. We, therefore, modify the rate of interest at 12% per annum simple instead of 18% per annum simple. 20. The award and the decree making the award rule of the Court stands modified to the extent as indicated above. 21. The appeal is partly allowed. The decree is thus modified. 22. There will be no order as to costs. Urgent xerox certified copy of this order, if applied for, be given. Gupta, J. : I agree.