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Himachal Pradesh High Court · body

2019 DIGILAW 468 (HP)

Prem Laxmi and Co. v. Himachal Pradesh State Electricity Board Ltd.

2019-04-25

VIVEK SINGH THAKUR

body2019
JUDGMENT : VIVEK SINGH THAKUR, J. 1. By means of present petition, preferred under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), petitioner-objector has assailed the Arbitral Award dated 16.05.2013, passed by the Arbitrator, in a dispute, between the parties, related to execution of work of construction of 775 meter long traffic tunnel, on the ground that the award so passed, is devoid of any reasoning and is a result of complete non application of mind by the Arbitrator. 2. Arising out of the dispute between the parties, petitioner-objector had submitted 5 claims before the Arbitrator, out of which 4 claims of the petitioner-objector have been rejected by the Arbitrator and Claim No. 1 for refund of Rs. 20,00,000/- has been allowed alongwith interest @ 7% per annum w.e.f. July, 2002 till the date of passing of the Award. It is the claim of the petitioner-objector that the Arbitrator has violated the mandatory provisions of Section 31(3) of the Act, which provides that unless parties have agreed to contrary the Arbitral Award shall state reasons upon which it is based. 3. Learned counsel for the petitioner-objector has placed reliance on the judgment of this High Court, passed in Janki Ram vs. State of H.P. and Others, (2008) 1 Latest HLJ 319, wherein after relying upon the judgments in Centro Trade Minerals and Metal Inc. vs. Hindustan Copper Ltd. (2006) 2 RAJ 531 (SC) passed by the Apex Court and judgment in Smt. Saroj Bala vs. Rajive Stock Brokers Ltd. and Another, (2005) 1 RAJ 637 passed by the Delhi High Court, award passed by the Arbitrator was set aside for not assigning the reasons for findings arrived at by the Arbitrator. 4. Further reliance has been placed on the judgments passed by the Apex Court in State of Rajasthan vs. Nav Bharat Construction Co. 4. Further reliance has been placed on the judgments passed by the Apex Court in State of Rajasthan vs. Nav Bharat Construction Co. (2006) 1 SCC 86 , Oil & Natural Gas Corporation Ltd. vs. Saw Pipes Ltd. (2003) 5 SCC 705 and T.N. Electricity Board vs. Bridge Tunnel Constructions and Others, (1997) 4 SCC 121 , wherein the Apex Court, after considering the plethora of judgments, has held that Section 31 of the Act mandates that the Award of the Arbitrator, should state reasons upon which it is based and in case the Award is contrary to the substantive provisions of law or the provisions of the Act, it would be patently illegal and liable to be interfered with under Section 34 of the Act. 5. The objection petition is resisted by the respondent-Board, on the ground that the learned Arbitrator was not a qualified or trained Judge, so as to expect from him to pass an award akin to the judgments passed by the Judicial Officers or Judges of the Court. It is canvassed by him that the purpose of mandatory provisions of Section 31(3) of the Act is to reflect the reasons in the award by the learned Arbitrator, which led for arriving at a particular conclusion by him and in present case, the Arbitrator has applied his mind by considering the claims of the petitioner-objector and objections raised by the respondent-Board and thereafter has returned the findings by expressing his opinion about the rival claims of the parties. 6. Reliance has also been placed on the judgment passed by the Apex Court in Nav Bharat's case (supra), wherein it has been canvassed that the purpose of Section 31(3) of the Act, is to enable the Court to see from the reasoning expressed by the Arbitrator that what impelled the Arbitrator to arrive at his conclusion and in case the Arbitrator has indicated the reasons for accepting or rejecting the claims at the time of passing the award, like the present case, it cannot be said that, for not giving elaborate judgment like a Judge, the Arbitrator has mis-conducted himself by not following mandatory provisions of Section 31(3) of the Act. 7. 7. By referring a decision rendered by the Apex Court in Som Datt Builders Limited vs. State of Kerala, (2009) 10 SCC 259 , it is submitted that where the Arbitrator has referred the facts of the case and has noticed some reasoning which in view of the Arbitrator was sufficient to arrive at a conclusion for granting relief, the award cannot be stated to be unreasoned as the Arbitrator is not expected to write an elaborate judgment and where the Arbitrator has noticed contentions of the counsel, it cannot be said that the Arbitrator has failed in stating reasons for the award as the reasons indicated in the award, howsoever brief these may be, but reflecting the thought process of learned Arbitrator leading to a particular conclusion, are sufficient to satisfy the requirement of Section 31(3) of the Act. 8. Reliance has also placed on the judgment rendered by the Apex Court in Markfed Vanaspati and Allied Industries vs. Union of India, (2007) 7 SCC 679 , wherein it has observed that endeavor of the Court should be to honour and support the award as far as possible. 9. It is also contended on behalf of the respondent-Board that the petitioner-objector is estopped from challenging the impugned award as it has already received and accepted the amount awarded vide impugned award through cheque dated 07.08.2013 amounting to Rs. 35,22,356/-. 10. By referring to judgment passed by the Apex Court in Pooran Chand Nangia vs. National Fertilizers Ltd. (2003) 8 SCC 245, wherein it is held that once the objector had submitted to the award unequivocally and without reservation by receiving the money, which was due to him under the Award, it was not open to the objector to challenge the Award, dismissal of the present petition has been prayed. 11. Learned counsel for the petitioner-objector has contended that vide communication dated 19.08.2013, it was duly conveyed to the respondent-Board that the petitioner- objector had received and encashed the cheque dated 07.08.2013 not in settlement of the impugned award, but was accepted and appropriated against the outstanding dues payable by HPSEB and it was informed to the respondent-Board that the impugned award being contrary to the provisions of the arbitration agreement as well as law, is liable to be set aside under Section 34 of the Act and appropriate steps, in accordance with law, had been taken in that regard. 12. Learned counsel for the petitioner-objector has also placed reliance on the judgment dated 04.09.2008, passed by the Delhi High Court in OMP No. 152 of 2002, titled as Jai Singh vs. DDA and Others, wherein it is held that a claimant ought not to be prevented from receiving the amounts awarded for the fear of losing the right to challenge the award insofar as with respect to the claims disallowed and when the statute confers right of a party to an arbitration to challenge the same, the said right cannot be taken away merely for the reason of the parties accepting payments under that part of the award which is neither challenged by him nor by the opposite party. 13. It is true that in Markfed Vanaspati's case (supra) the Apex Court has observed that endeavour of the Court should be to honour and support the award of the Arbitrator as far as possible, but it does not mean that objections preferred by the either party are definitely to be rejected, as the Apex Court in plethora of cases has also held that where award is not in consonance with the provisions of the Act or in terms of the agreement, and where learned Arbitrator has mis-conducted by acting beyond the jurisdiction or not complying with the provisions of the Act, award is to be interfered with by the Courts. Passing a non-speaking award, in confrontation with the provisions of Section 31(3) of the Act, will definitely invite interference by the Court and for that reason only verdict of the Apex Court is to protect the award as far as possible. 14. It is undisputed fact, as is evident from the record, that Court fee, for the purpose of filing the present petition was purchased on 14.08.2013 and the present petition was filed on the very same date, after supplying copy of the same to the representative of the standing counsel for the respondent-Board. The respondent-Board has claimed payment of the awarded amount vide cheque dated 07.08.2013, but no document substantiating the plea of the respondent-Board that the cheque was issued on 07.08.2013 and was also delivered or dispatched to the petitioner-objector on the very same date or any other date subsequent thereto, but before filing of the present petition, has been placed on record. Further there is nothing on record to reflect the date of encashment of the cheque by the petitioner-objector. Similarly, in the rejoinder, petitioner-objector has taken a plea that amount paid through cheque dated 07.08.2013 was received by it as a part payment and the said fact was communicated to the respondent-Board vide letter dated 19.08.2013. Neither letter dated 19.08.2013 has been placed on record nor any date of receiving the cheque and the date of encashing the same has been brought on record. Though, it emerges from the stand of the petitioner-objector that cheque dated 07.08.2013 was received and encashed by it, however there is no cogent, reliable and convincing evidence on record to oust the petitioner-objector on this count. 15. So far as pronouncement of the Apex Court in Pooran Chand Nangia's case (supra) is concerned, ratio of law is that once the objector has submitted to the award unequivocally and without reservation, it is not open for him to challenge the award. In such a situation, as per the verdict of the Apex Court, objections against the impugned award are liable to be dismissed. In Jai Singh's case (supra), Delhi High Court has held that the objector after accepting the payment under that part of the award, which is not challenged by the either party, cannot take away right of the objector to assail the rest award, meaning thereby that after accepting the amount paid in pursuance to claim, disentitles the objector from assailing the said portion of the award. 16. In the present case, Claim No. 1 has been allowed by awarding interest @ 7% per annum on the amount of Rs. 20,00,000/- liable to be refunded to the petitioner-objector and other claims of the petitioner-objector have been rejected. The respondent-Board has also made payment by calculating the amount on the basis of Claim No. 1, which was allowed by the learned Arbitrator in favour of the objector. 20,00,000/- liable to be refunded to the petitioner-objector and other claims of the petitioner-objector have been rejected. The respondent-Board has also made payment by calculating the amount on the basis of Claim No. 1, which was allowed by the learned Arbitrator in favour of the objector. However, it is not clear on record that acceptance of the said award by petitioner-objector was after or before filing of the objections, though cheque vide which it was paid by the respondent-Board was dated before filing the objections, but response thereto is dated 19.8.2013, i.e. after filing of the petition under Section 34 of the Act, therefore, there is no conclusive evidence on record to disentitle the petitioner-objector from assailing the said portion of the impugned award on this ground. However, even if it is considered that the petitioner-objector has not lost right to assail the finding on claim No. 1, the plea that the Arbitrator has not assigned reasons for deciding the claims, is not tenable for the discussion hereinafter. 17. Claim No. 1 is regarding release of Rs. 20,00,000/- which was deducted/retained by the respondent-Board for not achieving the milestones No. 1 and 2 at the time of execution of work by the petitioner-objector awarded to it, and also for awarding interest on the aforesaid amount as detailed in Claim No. 4. During the pendency of arbitration proceedings, respondent-Board vide order dated 19.12.2012 had decided to ratify the extension of time w.e.f. 23.07.1999 to 30.07.2004 in favour of the petitioner-objector and to refund the amount of Rs.20,00,000/- without interest. Learned Arbitrator under the head "award" against Claim No. 1, has observed that extension of time was ratified after a period of 12½ years and thereafter, he had given the relief by awarding interest @ 7% for delayed refund of amount after ratification of extension of time. So far as interest on Rs. 20,00,000/- deducted for not achieving milestones 1 and 2, is concerned, the same has been rejected by the Arbitrator by giving reason under the head of "award" mentioned in Claim No. 4, stating therein that said amount was deducted according to Clause 9B of the contract agreement for not achieving milestones No. 1 and 2 and thus the interest is not payable thereon. 18. 18. Under the head "award" against Claim No. 2, petitioner-objector's claim has been rejected by the learned Arbitrator by saying that according to his opinion respondent-Board had already paid for extra item beyond 20% limit as per contract and rate approved by EIC, which was accepted by the petitioner-objector and while assigning this reason, he has held that nothing is to be paid extra against Claim No. 2, which was claimed for substitution/ extra items. 19. Under the head of award, against Claim No. 3, the Arbitrator has given his opinion that a few payments disbursed/made by the respondent-Board through PFC/Bank in New Delhi, were accepted by the petitioner-objector and therefore, claim of the petitioner-objector was rejected, which was claimed on account of commission charges for making payment of various bills by PFC/Banks in New Delhi. 20. Petitioner-Objector, in Claim No. 4, had also claimed for payment of interest, on the amounts claimed by them. As noticed supra, the petitioner-objector was not held entitled for any amount claimed by it and deductions/retention made by respondent-Board was found to be in order as per the contract agreement, claim of interest has been rejected by the Arbitrator by stating so under head of 'award' in Claim No. 4. 21. Claim No. 5 has also been rejected in the head of 'award' under the said claim by stating that work was not completed in the stipulated period as per contract agreement and it was completed on 30.07.2000 and for not achieving milestones No. 1 and 2, Rs. 20,00,000/- were also retained by the respondent-Board and further that the extension of time has been ratified by respondent-Board on 19.12.2012 after a gap of period 12½ years with further rider that this extension of time shall not form basis of any claim whatsoever against the Department. On the basis of this rider, the learned Arbitrator has rejected Claim No. 5. 22. It is evident from the aforesaid discussion that after reproducing the rival contentions of the parties, the Arbitrator has formed his opinion and for forming said opinion, he has assigned some reasons while deciding respective claim and perusal thereof does not lead to the conclusion that the reasoning given by the learned Arbitrator was not sufficient to arrive at the said conclusion. It is not a case where the claim has been rejected without assigning any reason. 23. It is not a case where the claim has been rejected without assigning any reason. 23. In view of aforesaid discussion, it is not a case where it can be said that award does not contain any reason upon which it is based. Arbitrator, who is neither a judge nor professional expert in passing the judgment and thus may not be able to pass an award like a Judge. However, despite such limitation, his award must reflect the reasons for which he has rejected or accepted the claim. The Apex Court, as noticed supra, in the cases referred to by the parties, has also observed that Arbitrator is not expected to write an elaborate judgment and in the present case also after noticing the rival contentions of the parties, he has given his opinion based on the reasoning given by him under the head of award against each claim. The Arbitrator, may be with smallest expression but has given reason for rejecting the claims of the petitioner-objector. It is not a case where there is no reason assigned, but it can be said that precise reason has been mentioned against rejection of each claim, which, in my view, is sufficient expression as required under law. 24. All objections raised in present petition and also during arguments revolve around the plea that the Arbitrator has failed to assign reason and has passed a non-speaking award. It is not a case where no reason has been assigned by the Arbitrator for his findings. Reasons may be small or in one line, but definitely having bearing on the issues involved for deciding the claims of the petitioner-objector and in the objection petition, it is not the case of the petitioner-objector that any of the reasons assigned by the Arbitrator are contrary to law or not in consonance with the terms of the agreement. Therefore, I find no grounds for interference on the objections preferred and argued before me. 25. In view of the above, present petition is dismissed, so also pending applications, if any.