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2017 DIGILAW 2633 (RAJ)

Union Of India v. Sanjeev Enterprises

2017-11-30

INDERJEET SINGH

body2017
JUDGMENT Inderjeet Singh, J. 30.11.2017. - The instant appeal has been filed by the appellant against the judgment dated 18.02.2006 passed by the Additional District Judge No. 2 Kota in arbitration Case No. 1/2003 by which the objections submitted by the appellant under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred as Act of 1996) were dismissed. 2. Brief fats of the case are that the appellant-department awarded the contract to the respondent No. 1 contractor (hereinafter to be referred as contractor) for construction of office building and residential quarters for Provident Fund Commissioner, Kota vide order dated 20.07.1992. It was specifically mentioned in the work order that the work was to be completed within six months from the tenth day of issue of acceptance letter dated 20.07.1992 and the letter sent by the department was received by the contractor on 25.07.1992. After issuance of the acceptance letter from the department, the contract agreement No. 18/EE/ACD/92-93 was executed and signed by the parties. The contractor did not completed the work within time. Therefore, after completion of approximate 80% of the work upto 20.07.1993, the contract was rescinded by the department under Clause 3-A, 3-B and 3-C of the contract vide letter dated 21.07.1993. 3. The contractor sent a notice to the department for appointing the Arbitrator under Clause 25 of the contract agreement. The department appointed Mr. V. Nenani as sole arbitrator, however the said arbitrator resigned on 11.09.1995. Thereafter, the contractor filed an application before the Court of A.D.J. No.2 Kota for appointment of new arbitrator and the Court of A.D.J. No. 2 Kota vide order dated 24.05.1998 appointed Engineer R.J. Bakhru as sole arbitrator in the matter. 4. Before the Arbitrator contractor filed his claim and Department also filed its counterclaim. The learned Arbitrator after considering the claim and counter-claim submitted by both parties passed an award dated 20.09.2002 for Rs. 4,26,915/- in favour of the contractor and the counter-claim filed by the department was rejected. 5. Being aggrieved by the award dated 20.09.2002, the appellant submitted objection before the learned District Judge under Section 34 of the Act of 1996 which was dismissed by the learned District Judge vide judgment dated 18.02.2006. Hence, the present appeal has been filed. 6. Counsel for the appellant submitted that the learned Arbitrator has committed misconduct in passing the award in favour of the contractor. Hence, the present appeal has been filed. 6. Counsel for the appellant submitted that the learned Arbitrator has committed misconduct in passing the award in favour of the contractor. The counsel further argued that the contractor has left work in the middle and the department thereafter completed the work at their cost and the department has suffered a huge loss. Counsel further submitted that counterclaim of the department was wrongly rejected and interest has also been wrongly awarded by the contractor. Counsel lastly submitted that the Arbitrator has passed the award without appreciating the evidence available on record, thus, prayed for quashing the award as well as the order passed by learned District Judge. 7. On the other hand, counsel for the contractor argued that errors of fact cannot be corrected by the District Judge as per the scheme of the Act of 1996. Counsel further submitted that the Arbitrator is the master of the quality and quantity of the evidence to be relied upon when he delivers the award and the view taken by the Arbitrator cannot be challenged only on the ground that another view is possible. In support of his contentions, counsel relied upon the judgment passed by Hon''ble Supreme Court in the matter of Associate Builders vs. Delhi Development Authority reported in 2015 Volume-III SCC wherein the Hon''ble Supreme Court has held as under:- "16. it is important to note that the 1996 Act was enacted to replace the 1940 Arbitration Act in order to provide for an arbitral procedure which is fair, efficient and capable of meeting the needs of arbitration; also to provide that the tribunal gives reasons for an arbitral award; to ensure that the tribunal remains within the limits of its jurisdiction; and to minimize the supervisory roles of courts in the arbitral process. 17. It will be seen that none of the grounds contained in Sub-clause 2(a) deal with the merits of the decision rendered by an arbitral award. It is only when we come to the award being in conflict with the public policy of India that the merits of an arbitral award are to be looked into under certain specified circumstances. 33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. 33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts. In P.R. Shah, Shares and Stock Brokers (P) Ltd. vs. B.H.H. Securities (P) Ltd., this Court held: (SCC pp. 601-02, para 21) "21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or re-appreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second Respondent and the Appellant are liable. The case as put forward by the first Respondent has been accepted. Even the minority view was that the second Respondent was liable as claimed by the first Respondent, but the Appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under Bye-law 248, in a claim against a non-member, had no jurisdiction to decide a claim against another member. The finding of the majority is that the Appellant did the transaction in the name of the second Respondent and is therefore, liable along with the second Respondent. Therefore, in the absence of any ground Under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at." 8. Heard counsel for the parties. 9. Therefore, in the absence of any ground Under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at." 8. Heard counsel for the parties. 9. The contentions raised by counsel for the appellant regarding misconduct by Arbitrator is not acceptable in view of the fact that the Arbitrator was duly appointed by learned District Judge and at no point of time the department has objected about any action of the Arbitrator, the second argument raised by counsel for the appellant that the Arbitrator has not considered the evidence properly is also not acceptable in view of the fact that the Arbitrator is the master of the quality and quantity of the evidence to be relied upon when he delivers the award, last argument raised by counsel for the appellant regarding wrongful awarding of the interest by the Arbitrator is also not acceptable in view of the fact that there is no bar for awarding the interest in the contract agreement signed by the parties. Apart from this as per scheme of the Act of 1996, an award can be challenged only on the ground mentioned in Section 34(2) of the Act of 1996. 10. In view of the legal position with regard to interference with the award passed by the arbitrator as recorded above, I am of the considered view that the appellant-department has not been able to make out any case in this appeal and the learned Court below has rightly rejected the objections submitted by the appellant as no ground within the scope of Section 34(2) of the Act of 1996 was made out. 11. 50% of the award amount is deposited in the F.D.R. as per the order passed by this Court dated 26.11.2014, hence the Deputy Registrar Judicial is directed to hand over the amount lying in the F.D.R. to the respondent-Contractor. 12. In this view of the matter, the appeal filed by the appellant stands dismissed.