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Madhya Pradesh High Court · body

2009 DIGILAW 203 (MP)

State of M. P. v. Shukla Construction Company

2009-02-10

P.K.JAISWAL

body2009
ORDER 1. This appeal is directed against the order dated 12.5.1998 passed by the Additional District Judge, Bhopal in Arbitration Case No. 102-A/97, whereby the learned trial Court partly allowed the objection filed by the appellants under section 30 of the Arbitration Act, 1940 (for short "the Act') and partly confirmed the award dated 31.7.97 passed by the Arbitrator and issued a decree in terms of the award in favour of the respondent. 2. The facts giving rise to this appeal are that an agreement was executed between M/s. Shukla Construction Company (for short "the Contractor") and the State vide agreement No. 3/DL177 -78 for construction of approach road at Betwa River Bridge and work order was issued on 5.5.1977. As per the terms of the contractor, the Contractor had to complete the work within a period of 12 months. The Contractor immediately after receipt of the work order started the work. There arose a dispute for lifting of fixed quantity of earth from the quarry and therefore the earth work was affected for the period from June 1977 to April 1978. The Contractor filed a claim petition before the appropriate authority as per the terms of the contract. As per the final bill, the work was completed and the payment was made on 24.9.1986. On 18.9.1980, the Contractor filed another claim in respect of the other Claims to the appellants No.4 as per the terms and conditions of the contract. The contractor being dissatisfied with the said award dated 11.5.1983 challenged the same before the Civil Court in Special Case No. 24/84, which was allowed vide order dated 6.4.95 with a direction to the appellant No.3 to refer the matter to the Superintending Engineer for deciding the dispute between the parties. 3. The appellant No. 3 referred the dispute to one Shri H.K. Arora, Superintending Engineer in the Office of the Chief Engineer, PWD. He was appointed as Arbitrator by the appellant No.3. The respondent-Contractor, however, filed 12 claims before the Arbitrator. Parties led oral and documentary evidence. The Arbitrator after hearing the parties and taking into consideration the documents on record decided all the disputes and passed an award in favour of the respondent on 29.7.1997. The contractor was intimated about passing of the award dated 31.7.97. The respondent-Contractor filed an application under section 17 of the Act for making an award rule of the Court. 4. The Arbitrator after hearing the parties and taking into consideration the documents on record decided all the disputes and passed an award in favour of the respondent on 29.7.1997. The contractor was intimated about passing of the award dated 31.7.97. The respondent-Contractor filed an application under section 17 of the Act for making an award rule of the Court. 4. The appellants filed objections under section 30 of the Act on the ground that the Arbitrator without granting proper opportunity to the appellants and in violation to the principle of nature justice, passed the impugned award and has misconducted himself inasmuch as he had ignored the terms of the contract and passed an award contrary to the terms of the contract. 5. The trial Court perusing the record of the case and hearing arguments be the learned counsel for the parties, by the impugned order dated 12.5.95, allowed the Claim Nos. 1,2,5,6,7,10 and 11 and in respect of Claim No.4, the learned trial Court directed to make payment as per the actual work done by the Contractor and held that the respondent is entitled for Rs. 21,720.20 towards watering work and in respect of reaming rolling work Rs. 17,335.62 cubic metre as per the terms of the control. In respect of Claim No.6, the learned trial Court directed the payment towards the work of embankment on the same rate which was paid to M/s. Suresh Brothers. In respect of Claim No.7, the learned trial Court directed the payment of 25,622.28 cubic metre of earth work as per the rate in the agreement. In respect of transportation of 2159.85 cubic metre and 32000 cubic metre earth work, the payment be made considering the lead of two kilometers. In respect of Claim No.1 of the trial Court upheld the amount of award of Rs. 2,97,507/- awarded by the Arbitrator. It has also been held that the respondent is entitled for interest at the Bank rate from 19.6.1980 to 31.7.1997. With the aforesaid, the learned trial Court upheld the amount of the award on the basis of the work done by the Contractor and modified the award dated 31.7.1997 and made the award a rule of the Court and passed a decree in terms thereof. 6. With the aforesaid, the learned trial Court upheld the amount of the award on the basis of the work done by the Contractor and modified the award dated 31.7.1997 and made the award a rule of the Court and passed a decree in terms thereof. 6. It is submitted by the learned Government Advocate that the Arbitrator did not apply his mind in passing the award dated 31.7.1997 and he committed a legal misconduct in allowing the claim of the Contractor. It is further contended that the learned trial Court has upheld the finding of fact recorded by the Arbitrator without assigning reasons and the amount awarded is contrary to the terms and conditions of the agreement and the scope of the contract. 7. On the other hand, the learned counsel for the respondent submitted that the Arbitrator after recording the necessary evidence and after examining the whole material on record passed the award and the learned trial Court after examining the whole material on record came to the conclusion that the claim of the Contractor deserves to be accepted partially and therefore partly modified the award and made it rule of the Court by its order dated 12.5.1998. He has strenuously urged before me that the scope in this appeal is very limited and it is not open to this Court to examine the matter like an appellate authority nor it is open to this Court to sit as a Court of appeal while disposing of the award of the Arbitrator, which was made the rule of the Court. 8. The Apex Court in the case of B. V. Radha Krishna v. Sponge Iron India Ltd. [ (1997) 4 SCC 693 ] has observed in Para 3 as under:-- "13. Bearing in mind the principles laid down by this Court in the above said cases, if we look into disposal of the matter by the High Court, it would be evident that the High Court has substituted its own view in place of the arbitrator's view as if it was dealing with an appeal. That is exactly what is forbidden by the decisions of this Court. Therefore, we have no hesitation to set aside the judgment of the High Court on this issue." 9. The Apex Court in the State of Rajasthan v. Puri Constuction Co. That is exactly what is forbidden by the decisions of this Court. Therefore, we have no hesitation to set aside the judgment of the High Court on this issue." 9. The Apex Court in the State of Rajasthan v. Puri Constuction Co. Ltd. [ (1994) 6 SCC 485 ] has held as under:-- "However, in the anxiety to render justice to the party to arbitration, the Court should not reappraise the evidence 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 Arbitrator Act. If a question of law is referred to arbitrator and the arbitrator comes to a conclusion, it is not open to challenge the award on the ground that an alternative view of law is possible. Even if it is assumed that on the materials on record, a different view could have been taken and arbitrators have failed to consider the documents and materials on record, in their proper perspective, the award is not liable to be struck down in view of judicial decision referred to hereinbefore. Error apparent on the face of the record does not mean that on closer scrutiny of the import of documents and materials on record, the finding made by the arbitrator may be held to be erroneous. An error of law or fact committed by an arbitrator by itself does not constitute misconduct warranting interference with the award." 10. It is not the case of the State that there was no material on which the finding was recorded by the Arbitrator. It is well settled law that the award can be set aside if the same is in violation to the terms of the contract if relevant documents are not considered by the Arbitrator, therefore, I asked the learned Government Advocate to substantiate his arguments and point out as to how the Arbitrator committed a legal misconduct when the finding recorded by the Arbitrator is based on the material on record. The Arbitrator in his detailed award has recorded his finding on the basis of the documents filed by the parties and as per the terms of the contract allowed certain claims to the Contractor. But the learned Government Advocate failed to point out as to how the Arbitrator mis-conducted or he has drawn inconsistence conclusion while awarding the amount to the contractor. 11. On perusal of the material available on record, I find that the majority of claims, which was upheld by the learned trial Court, is in terms of the contract. The learned Government Advocate failed to point out as to how the Arbitrator had gone beyond the terms of the contract or allowed the claim against the terms of the contract. The Arbitrator gave a reasoned order. It is well settled law that if an interpretation of term contract is involved, then the interpretation of the Arbitrator must be accepted unless it is one which could not be reasonably possible. It is also well settled that the Court cannot substitute its own interpretation to avoid arbitrarineses so long as the interpretation of the Arbitrator is a possible one. Here in the present case, the reason assigned by the Arbitrator and the view taken by the Arbitrator is a possible view. The Arbitrator gave reasoning while allowing the claim of the Contractor and therefore it cannot be said that the Arbitrator has misconducted in passing the impugned award or it would be a legal misconduct. The decision cited by the learned Government Advocate in the case of Union of India and others v. Santiram Ghosh [ AIR 1989 SC 402 ] is not applicable in the present facts and circumstances of the case. The award was passed under Indian Arbitration Act, 1940. The appellants failed to satisfy the Court that there was any misconduct on the part of the Arbitrator. The findings recorded by the trial Court are just and proper. Nothing could be pointed out by the appellants to interfere in the impugned order. 12. For the above mentioned reasons, the appeal filed by the appellants has no merit and is accordingly dismissed with costs. Counsel's fee Rs.3,000/-.