BHARAT BATTERIES MANUFACTURING CO. PVT. LTD. v. UNION OF INDIA
2009-11-20
MANMOHAN
body2009
DigiLaw.ai
ORDER 1. With consent of the parties, matter is taken up for final disposal. I.A. No. _____ (To be numbered) Present application has been filed under Section 14 read with Section 5 of the Limitation Act seeking condonation of delay in filing objections to the sole Arbitrators Award dated 9th March, 2007. 2. Mr. Rajesh Banati, learned Counsel for petitioner states that even if the period for which condonation is sought is condoned then also there would be a delay of 155 days. 3. However, in my opinion, keeping in view the fact that present application has been filed seeking condonation of delay in filing objections under the Arbitration Act, 1940 (hereinafter referred to Act, 1940), Section 5 would be applicable and consequently, I condone the delay in filing objections. Application stands disposed of accordingly. I.A. No. 3590/2009 4. Present application has been filed by respondent-Union of India under Sections 30 and 33 of the Act, 1940 challenging the Sole Arbitrators Award dated 9th March, 2007. 5. Ms. Geeta Sharma, learned Counsel for Union of India has submitted that the impugned Award suffers from an error apparent on the face of the record inasmuch as the Arbitrator had failed to take into account an inter-office Memo dated 11th June, 1990 wherein it was specifically recorded that petitioner firm had not preferred its Bill for the balance 2% payment. Since Ms. Sharma laid considerable emphasis on the office Memo dated 11th June, 1990, the same is reproduced hereinbelow: “D.O. No. SA6/RC PE3/015/9-84/BHARAT BATTERY /273-274 DATED: 11 JUNE, 1990 Dear Shri Chopra, Please refer to your Telex dated 25.5.1990 regarding withholding of Rs. 77,710.00 towards balance 2% payments in respect of Inspection Note No. 374598/18/22 dated 6.1.1987, R.R. Nos. (i) A-574288 dated 15.1.1987 (ii) A-574297 date 20.1.1987 supplied against Supply Order No. RC/09/LV6/MT-4/85-86/Prov dated 12.7.1985 under R.C. No. PE3/Am-7/RC0983/ Btys/Defence/84-85/77/E- 3/Bharat/015/CPAC dated 29.6.1984 placed on M/s. The Bharat Battery Mfg. Co. (P) Ltd., 2384, Acharya Jagdish Chandra Bose Road, Calcutta-700020. In this connection, I would like to state that no such amount has been withheld by this office from the firms bills. Moreover, the firm has not yet preferred their balance 2% bill against the aforesaid Inspection Note and the consignee viz. Commandant, 224 Adv. Base Ordnance Depot, Suranussi (Jalandhar-144027) under letter No. 4252/MT /Bty /888/Prov. dt. 20.2.1990 had intimated that they received 8 Nos.
Moreover, the firm has not yet preferred their balance 2% bill against the aforesaid Inspection Note and the consignee viz. Commandant, 224 Adv. Base Ordnance Depot, Suranussi (Jalandhar-144027) under letter No. 4252/MT /Bty /888/Prov. dt. 20.2.1990 had intimated that they received 8 Nos. of broken deficient batteries against the above R.R. for which replacement supply is necessary. . Regarding recovery of liquidated damages. I would like to state that the deduction towards liquidated damages were shown by the firm in their balance bills as per amendment letters issued by the Inventors from time to time It is confirmed that the amount of Rs. 437,265.60 was shown as deductions towards L/D in their balance 2% bills. Yours sincerely Sd/- (S.N. GOSWAMI) Sri R.P. Chopra Asstt. Director (Supplies) AM-7/Directorate, Office of the DGS and D Jeevantara Building 5, Sansad Marg, New Delhi-110001” 6. I may mention that the impugned award in the present proceedings has been passed as a consequence of a remand order passed by this Court on 20th September, 2002 whereby the initial award dated 24th June, 1991 was set aside insofar as it disallowed petitioners claim for balance 2% payment. The relevant portion of this Courts order dated 20th September, 2002 reads as under: "In para 11 of the counter affidavit the respondent had clearly admitted that they had sought confirmation from the Controller of Accounts and the same was awaited. The arbitrator rejected the claim on the ground that the claimant had not proved lodging of such a claim. It is admitted case of the parties that the claim was lodged and the matter was under consideration of the Controller of Accounts, Calcutta. In these circumstances, the arbitrator was wrong in rejecting the claim of the petitioner. To that extent the Award of the arbitrator is liable to be set aside." 7. Learned Arbitrator in the impugned award while allowing the claim remanded by this Court has observed as under: "5.3 The Court further observed that it is an admitted case of the parties that the claim was lodged and the matter was under consideration of the Controller of Accounts. 6.1. In pursuant of the Court order dated 20.9.2002, arbitration proceedings were held on 14.2.2005, 1.3.2005, 5.5.2005, 3.8.2005, 26.9.2006 and 6.11.2006.
6.1. In pursuant of the Court order dated 20.9.2002, arbitration proceedings were held on 14.2.2005, 1.3.2005, 5.5.2005, 3.8.2005, 26.9.2006 and 6.11.2006. It is not the case of the respondents that the claimants are not entitled to the balance payment of 2% on account of supplies made nor that the claimants have received that payment. On the other hand contention of the respondents all along had been that the claimants had not lodged their claim. 6.2. Parties were heard at length and full opportunities were given to respondents to prove their respective cases. However, Counsel for the UOI failed to rebut the admitted position in their counter filed before the Court as referred to above. Besides, I feel they cannot go against the statement made on affidavit lest they should face the offence of perjury. 7. The aforementioned judgment was delivered on Sept. 20, 2002 and the same having been not challenged successfully. There is no stay against the Order dated 20th September, 2002 of the Delhi High Court. The findings of the Honble High Court that the claim was lodged and the matter had been under consideration of the Controller of Accounts are binding on the Arbitrator. Thus there is no scope for the Arbitrator to go beyond the settled and admitted questions of fact. Besides, there is no ground available to the respondents to withhold the balance payment of Rs. 77,710/- on account of 2% of supplies made. 8. In view of the above, the claimants claim of Rs.77,710/ - on account of balance 2% payment is allowed." 8. Having heard the parties, I am of the view that before I deal with the rival contentions, it would be appropriate to first outline the scope of interference by this Court with an arbitrators award rendered under the Act, 1940. 9. Section 30 of Act, 1940 stipulates that an Arbitrators award shall not be set aside except for grounds as mentioned therein, namely, (i) 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; and (c) that an award has been improperly procured or is otherwise invalid. 10.
10. It is now well settled that an Arbitrator is the sole judge of quality as well as quantity of the evidence and a Court cannot sit in appeal over the Arbitrators views by examining and reassessing the materials. In fact, the Supreme Court in Arosan Enterprises Ltd. v. Union of India and Anr., reported in VIII (1999) SLT 104= (1999) 9 SCC 449 , has observed as under: “36. Be it noted that by reason of a long catena of cases, it is now a well settled principle of law that reappraisal of evidence by the Court is not permissible and as a matter of fact exercise of power by the Court to reappraise the evidence is unknown to proceedings under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the Court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. In the event however two views are possible on a question of law as well, the Court would not be justified in interfering with the award. 37. The common phraseology error apparent on the face of the record does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record. The Court as a matter of fact, cannot substitute its evaluation and come to the conclusion that the Arbitrator had acted contrary to the bargain between the parties. If the view of the Arbitrator is a possible view the award or the reasoning contained therein cannot be examined. In this context, reference may be made to one of the recent decisions of this Court in the case of State of Rajasthan v. Puri Construction Co. Ltd., (1994) 6 SCC 485 wherein this Court relying upon the decision of Sudarsan Trading Co. case (Sudarsan Trading Co. v. Govt. of Kerala, (1989) 2 SCC 38 ) observed in para 31 of the Report as below (SCC pp.-502-03, para 31)- ‘31.
Ltd., (1994) 6 SCC 485 wherein this Court relying upon the decision of Sudarsan Trading Co. case (Sudarsan Trading Co. v. Govt. of Kerala, (1989) 2 SCC 38 ) observed in para 31 of the Report as below (SCC pp.-502-03, para 31)- ‘31. A Court of competent jurisdiction has both right and duty to decide the lis presented before it for adjudication according to the best understanding of law and facts involved in the lis by the Judge presiding over the Court. Such decision even if erroneous either in factual determination or application of law correctly, is a valid one and binding inter partes. It does not, therefore, stand to reason that the Arbitrators award will be per se invalid and inoperative for the simple reason that the Arbitrator has failed to appreciate the facts and has committed error in appreciating correct legal principle in basing the award. An erroneous decision of a Court of law is open to judicial review by way of appeal or revision in accordance with the provisions of law. Similarly, an award rendered by an Arbitrator is open to challenge within the parameters of several provisions of the Arbitration Act. Since the Arbitrator is a Judge by choice of the parties, and more often than not, a person with little or no legal background, the adjudication of disputes by an arbitration by way of an award can be challenged only within the limited scope of several provisions of the Arbitration Act and the Legislature in its wisdom has limited the scope and ambit of challenge to an award in the Arbitration Act. Over the decades, judicial decisions have indicated the parameters of such challenge consistent with the provisions of the Arbitration Act. By and large the Courts have disfavoured interference with arbitration award on account of error of law and fact on the score of misappreciation and misreading of the materials on record and have shown definite inclination to preserve the award as far as possible. As reference to arbitration of disputes in commercial and other transactions involving substantial amount has increased in recent times, the Courts were impelled to have a fresh look on the ambit of challenge to an award by the Arbitrator so that the award does not get undesirable immunity.
As reference to arbitration of disputes in commercial and other transactions involving substantial amount has increased in recent times, the Courts were impelled to have a fresh look on the ambit of challenge to an award by the Arbitrator so that the award does not get undesirable immunity. In recent times, error in law and fact in basing an award has not been given the wide immunity as enjoyed earlier, by expanding the import and implication of legal misconduct of an Arbitrator so that award by the Arbitrator does not perpetrate gross miscarriage of justice and the same is not reduced to mockery of a fair decision of the lis between the parties to arbitration. Precisely for the aforesaid reasons, the erroneous application of law constituting the very basis of the award and improper and incorrect findings of fact, which without closer and intrinsic scrutiny, are demonstrable on the face of the materials on record, have been held, very rightly, as legal misconduct rendering the award as invalid. It is necessary, however, to put a note of caution that in the anxiety to render justice to the party to arbitration, the Court should not reappraise the evidences intrinsically with a close scrutiny for finding out that the conclusion drawn from some facts, by the Arbitrator is, according to the understanding of the Court, erroneous. Such exercise of power which can be exercised by an appellate Court with power to reverse the finding of fact, is alien to the scope and ambit of challenge of an award under the Arbitration Act. Where the error of finding of facts having a bearing on the award is patent and is easily demonstrable without the necessity of carefully weighing the various possible viewpoints, the interference with award based on erroneous finding of fact is permissible. Similarly, if an award is based by applying a principle of law which is patently erroneous, and but for such erroneous application of legal principle, the award could not have been made, such award is liable to be set aside by holding that there has been a legal misconduct on the part of the Arbitrator.
Similarly, if an award is based by applying a principle of law which is patently erroneous, and but for such erroneous application of legal principle, the award could not have been made, such award is liable to be set aside by holding that there has been a legal misconduct on the part of the Arbitrator. In ultimate analysis, it is a question of delicate balancing between the permissible limit of error of law and fact and patently erroneous finding easily demonstrable from the materials on record and application of principle of law forming the basis of the award which is patently erroneous. It may be indicated here that however objectively the problem may be viewed, the subjective element inherent in the Judge deciding the problem, is bound to creep in and influence the decision. By long training in the art of dispassionate analysis, such subjective element is, however, reduced to minimum. Keeping the aforesaid principle in mind, the challenge to the validity of the impugned award is to be considered with reference to judicial decisions on the subject." 11. Keeping in view the respondents admission on affidavit in the earlier proceedings in this Court, I am of the view that the respondent-UOI’s reliance on its own inter-office Memo dated 11th June, 1990 is misconceived and without any merit. In any event, the Arbitrators Award calls for no interference inasmuch as it is neither based on a wrong proposition of law nor it suffers from any perversity. In fact, the Arbitrator has given cogent and intelligible reasons in his award. . 12. However, in view of the fact that payment has been wrongly withheld by the respondent, I deem it appropriate to grant 9% simple interest from the date of the impugned award i.e. 9th March, 2007 till the date of payment. With the aforesaid observations, the A ward is made rule of the Court. Registry is directed to prepare a decree in terms of the A ward after incorporating the aforesaid rate of interest for the period mentioned hereinabove. Accordingly, present suit and applications stand disposed of. Suit & Applications disposed of.