Oil and Natural Gas Corporation Limited v. Dilip Kumar Kar
2004-11-19
A.B.PAL, BIPLAB KUMAR SHARMA
body2004
DigiLaw.ai
JUDGMENT B.K. Sharma, J. 1. This appeal is directed against the order passed on 24.05.96 in Title Suit (ARB) 116/1994 by the learned Civil Judge, (Sr. Division) No. 1, West Tripura, by which the award passed by the arbitrator on 23.08.94 was set aside. 2. Brief facts leading to filing of the instant appeal are that some dispute had arisen between the Appellants and the Respondents in respect of execution of a contract work of 1990. Necessary formalities towards execution of the work such as floating of tenders, execution of contract agreement etc. were duly carried out towards entrusting the work to the Respondent. It is the case of the Appellants that soon after the execution of the contract documents, the Respondent contractor laid his claim for escalated value of the contract @ 30% on all items. In response to such claim the officer of the Respondents asked for the supporting documents and thereafter asked for details for each item with rate analysis, which the Respondent/contractor submitted, on 08.03.91. 3. The Respondent/contractor vide a communicated dated 05.08.91 while admitting the receipt of final bill reiterated his stand for 30% escalation on the value of the contract performed i.e. Rs. 14,46,345/- as against the tender value of Rs. 14,20,656/-. He also claimed interest @ 18% per annum. The Respondent contractor alleged that there was delay in issuing the work order causing prejudice to him and thereby he had sustained lost. It was on that basis a dispute was raised and as per the provisions of the contract agreement the dispute was referred to the appointed arbitrator. 3.1 The arbitrator entered into the reference on 31.05.93 and asked the parties for submission of statement of fact, counter statement of fact and for exchange of documents. After observing the necessary formalities and giving adequate opportunities to the parties, the arbitrator concluded the hearing on 26.04.94. Thereafter, the arbitrator by the order dated 23.08.94 passed the following award: In view of above. I draw the following conclusions and Award the Arbitration on the schedule of dispute and the particulars of claim lodged by the Claimant contractor. A. As the escalation of prices during execution of the contract from the date of letter of acceptance/signing of contract is not established, the enhancement asked for by the claimant contractor is not payable.
I draw the following conclusions and Award the Arbitration on the schedule of dispute and the particulars of claim lodged by the Claimant contractor. A. As the escalation of prices during execution of the contract from the date of letter of acceptance/signing of contract is not established, the enhancement asked for by the claimant contractor is not payable. B. As no escalation/enhancement of contract price is payable, the interest as claimed by the claimant contractor is also not payable. C. The Claimant Contractor is also not entitled for cost of Arbitration as the claim is not established. D. Cost of Arbitration including the Arbitrator's fees of Rs. 2,000/- (Rupees Two Thousand only) will be payable by the claimant contractor Shri Dilip Kumar Kar and the Respondent, S.E. (c) ONGC, Tripura Project, Agartala by sharing equally. 4. The Respondent/contractor filed Title Suit (ARB) 116/94 in the Court of the Civil Judge, West Tripura, Agartala under Section 14(2) of the Arbitration Act, 1940 praying for a direction to the sole arbitrator to file the award before the Court together with all other documents and depositions enabling him to take further necessary action. Upon filing of the award, the contractor/Respondent filed objection under Section 30 and 33 read with Section 16 of the Arbitration Act, 1940 praying for setting aside the award passed by the arbitrator. 5. The Civil Judge, Sr. Division, West Tripura, Agartala by the impugned order dated 24.05.96 set aside the award passed by the arbitrator solely on the ground that the arbitrator dealt with certain documents filed by the Defendants/Appellants after conclusion of hearing. According to the learned Civil Judge, the arbitrator took into consideration those documents towards passing the award without allowing the Plaintiff any opportunity of being heard which resulted in misconduct on the part of the arbitrator. 6. We have heard Mr. S. Deb, learned Sr. Counsel for the Appellants assisted by Mr. R. Dasgupta, learned Advocate. Mr. S. Bhattacharijee, learned Advocate argued on behalf of the Respondent/contractor. 7. Attacking the impugned judgment of the learned Civil Judge, Mr. Deb, learned Sr. Counsel extensively argued that the same is not sustainable in law.
6. We have heard Mr. S. Deb, learned Sr. Counsel for the Appellants assisted by Mr. R. Dasgupta, learned Advocate. Mr. S. Bhattacharijee, learned Advocate argued on behalf of the Respondent/contractor. 7. Attacking the impugned judgment of the learned Civil Judge, Mr. Deb, learned Sr. Counsel extensively argued that the same is not sustainable in law. Referring to the dates involved in the arbitration proceeding, more particularly the date of conclusion of hearing on 26.04.1994, date of submission of written argument on behalf of the Appellants on 27.04.94 and the submission of counter argument by the Respondent/contractor on 14.05.94, Mr. Deb, learned Sr. Counsel argued that on conclusion of hearing on 26.04,94, it was agreed by and between the parties that written argument would be filed and accordingly both the parties submitted their written argument and thus there was no question of causing any prejudice to the Respondent/contractor. He placed reliance on the following decisions of the Apex Court. AIR 2000 SCW 4384 (State of Kerala v. M/S. Arya Refrigeration) (2002) 5 SCC 679 (W.B. State Warehousing Corporation v. Sushil Kumar Kayan) (2003) 8 SCC 154 (Bharat Coking Coal Ltd. v. Annapurna Construction) AIR 2001 SCW 2723 (M/S Ispat Engineering v. M/s. Steel Authority of India) 8. On the other hand, Mr. S. Bhattacharijee, learned Counsel appearing for the Respondent strenuously argued supporting the impugned order of the learned Civil Judge. According to him the four documents, which were submitted alongwith the written argument filed by the Appellants on 27.04.94 on conclusion of hearing on 26.04.94 caused serious prejudice to the case of the Respondent/contractor. He submitted that but for the reliance placed on those documents, the arbitrator would not have passed the award rejecting the claim of the Respondent/contractor. He submitted that the arbitrator ought not to have accepted those documents on conclusion of hearing and that too behind the back of the Respondent/contractor and without giving him any opportunity to have his say on those documents. 9. We have given our anxious consideration to the submissions made by the learned Counsel for the parties. We have also perused the materials available on records. The law relating to passing of award by the arbitrator and the scope and ambit of interference with the same need not be reiterated. It is in this context, Mr. Deb, learned Sr. Counsel for the Appellants referred to the aforesaid decisions.
We have also perused the materials available on records. The law relating to passing of award by the arbitrator and the scope and ambit of interference with the same need not be reiterated. It is in this context, Mr. Deb, learned Sr. Counsel for the Appellants referred to the aforesaid decisions. In the case of M/s. Arya Refrigeration (supra), the Apex Court having noticed that the arbitrator had given a very well reasoned and detailed award, did not interfere with the same. Similarly, in the case of Sushil Kumar Kayan (supra), the Apex Court held that the award made by an arbitrator can be set aside if the arbitrator acts beyond jurisdiction. Likewise, in the case of Bharat Coking Coal Ltd. (supra), the Apex Court referring to its earlier decisions pointed out the distinction between error within jurisdiction and error in excess of jurisdiction. In the case of M/s. Ispat Engineering (supra), the Apex Court held that the setting aside of the award by the High Court on the ground of being invalid was erroneous, observed as follows: Presently in the contextual fact, there is no evidence on record that the umpire has overstepped his jurisdiction or has traveled beyond the agreement and it is in this perspective that the Court ought not to have entertained the objections and set aside the award as passed by the chosen forum of the parties. The High Court thus was in manifest error in entertaining the appeal and setting aside the award. The order as passed by the High Court cannot be sustained and the law being well settled on the score should not have been misread and misapplied by the High Court. 10. The award passed by the arbitrator, is a well-balanced one dealing with the pros and cons of the entire matter. He took into account the contentions raised by the parties. The only ground on which the award has been set aside is that the arbitrator while accepting the written argument submitted by the Appellants also accepted four documents enclosed therewith. It was only on that basis the learned Civil Judge set aside the award holding that the arbitrator misconducted himself. While doing so, the learned Civil Judge did not even obliquely refer to those documents so as to judge them in the touchtone of prejudice caused to the Respondent/contractor.
It was only on that basis the learned Civil Judge set aside the award holding that the arbitrator misconducted himself. While doing so, the learned Civil Judge did not even obliquely refer to those documents so as to judge them in the touchtone of prejudice caused to the Respondent/contractor. Out of the four documents submitted on behalf of the Appellants, two were decisions of the Apex Court. The other two documents were in respect of evidences already on record and pertained to the effective date on prices of materials. 11. Nothing could be shown by the learned Counsel for the Respondent/contractor as to how the production of the said four documents alongwith the written argument caused prejudice to the case of the Respondent/contractor. He was specifically asked to clarify the matter even at this stage during the course of hearing of the appeal, which he failed to do. As already noticed above, out of the four documents two were by way of submission of two decisions and the remaining two documents were pertaining to the effective date relating to prices on materials which already formed part of the evidence. A copy of the written argument was also furnished on the Respondent/contractor, in response to which, he also submitted his counter argument on 14.05.94. Thus the Respondent/contractor got ample opportunity to deal with those four documents. However, except making a vague and indefinite statement in the counter argument that certain documents were filed behind the back of the claimant requiring them to be ignored the Respondent/contractor, did not specify anything as to how the production of the same caused any prejudice to his case. In the objection filed before the learned Civil Judge also the Respondent/contractor made a vague statement about the production of the said documents allegedly behind his back. 12. The learned Civil Judge while setting aside the award of the arbitrator solely on the ground of production of documents after conclusion of hearing by the Appellants has not discussed about the relevance of the said documents and also as to how the same caused any prejudice to the case of the Respondent/contractor. Learned Civil Judge also has not discussed anything as to how the said documents influenced the arbitrator and as to whether the arbitrator at all took the said documents into consideration.
Learned Civil Judge also has not discussed anything as to how the said documents influenced the arbitrator and as to whether the arbitrator at all took the said documents into consideration. The learned Civil Judge instead of deciding the issue on merit took a short-cut method towards setting aside the award. 13. We have gone through the award passed by the arbitrator, In the well-written and reasoned award, the arbitrator discussed all the materials on record adduced by the parties. Nothing could be brought out by the learned Counsel for the Respondent that the award was based on the four documents in question. Nothing could also be brought out as to how the production of the said documents caused any prejudice to the case of the Respondent/contractor. As pointed out above, learned Counsel for the Respondent/contractor, during the course of hearing was permitted to show any prejudice which might have been caused to the case of the Respondent/contractor in view of the production of the said four documents. He fairly admitted that no prejudice could be shown. 14. We have failed to understand as to how the production of two decisions of the competent court of law by the Appellants alongwith the written argument could cause any prejudice to the Respondent/contractor. Similarly, the other two documents were only in respect of effective date of price of materials already forming evidence/materials on record. The Respondent/contractor also got ample opportunity to have his say in the matter after submission of the written argument on 27.04.94. In fact reacting to the written argument submitted on behalf of the Appellants, the Respondent/contractor also submitted his counter argument on 14.05.94. If he was of the opinion that those documents would cause prejudice to his case, he could have said so while submitting the counter argument on 14.05.94. Instead, he had chosen not to highlight anything in the matter as was expected of him, if at all he was serious about the so called prejudice. He took a chance for favourable consideration in the matter and when the award had gone against him, raised the objection relating to the said documents urging a vague and indefinite ground. 15. In the aforesaid legal and factual background of the matter, the learned Civil Judge, could not have and ought not to have interfered with the award in the manner and method in which the same has been done.
15. In the aforesaid legal and factual background of the matter, the learned Civil Judge, could not have and ought not to have interfered with the award in the manner and method in which the same has been done. The mechanical approach adopted by the said Court was totally unwarranted. The principle of natural justice could no have been stretched that far so as to defeat the very object of referring the dispute to the arbitrator as per the provisions of the contract agreement. As discussed above, the law is well settled relating to ambit and scope of interference with the award passed by the arbitrator. Such an award cannot be interfered with lightly. The ground assigned by the learned Civil Judge, which according to him constituted misconduct on the part of the arbitrator does not come within the parameters warranting interference with the award passed by the arbitrator. 16. As discussed above, the award passed by the arbitrator is a well written and balanced one taking into account the materials adduced by both the parties. There is nothing to indicate that the arbitrator was influenced in any manner because of production of the said documents. This is precisely the reason as to why the learned Counsel for the Respondent/contractor could not point out anything as to how even leaving aside those four documents, the case of the Respondent/contractor was required to be accepted by the arbitrator. 17. In view of the above, we are of the considered opinion that the learned Civil Judge, (Sr. Division) No. 1, West Tripura, Agartala committed manifest error of law in setting aside the award dated 23.08.94 made by the sole arbitrator. Accordingly, interference is called for in the order dated 24.05.96 passed by the Civil Judge, (Sr. Division) No. 1, West Tripura, Agartala in TS (ARB) 116/1994. We set aside and quash the same, restoring the aforesaid award of the arbitrator. 18. The appeal stands allowed, leaving the parties to bear their own costs. Appeal allowed