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2020 DIGILAW 21 (TRI)

Bidyut Deb Chowdhury v. State of Tripura

2020-01-27

AKIL ABDUL HAMID KURESHI, ARINDAM LODH

body2020
JUDGMENT : Arindam Lodh, J. 1. This appeal is presented before this Court under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 against the judgment dated 14.09.2018, passed by the learned District Judge, Unakoti Judicial District, Kailashahar(Shri P.K. Dutta) in Title Suit No. 1(Arb-) of 2015. 2. Heard Mr. S.M. Chakraborty, learned Sr. counsel, assisted by Ms. B. Chakraborty, learned counsel appearing for the appellant and Mr. H. Sarkar, learned counsel appearing for the State respondents. 3. By way of filing this appeal the appellant has challenged the legality and validity of the arbitral award arising out of disputes as cropped up between contractor-appellant and the State respondents in the process of performance of contract work awarded to by the Public Works Department, Government of Tripura in favour of the appellant. 4. Briefly stated, a tender was floated relating to the work "Construction of 12 Nos. Type-II quarters for the staff of District Jail at Kailashahar/Construction of 8 numbers Type-II quarters (two twin double stories)/SH : building portion including water supply and sanitary installation only". The appellant submitted his tender which was ultimately accepted, and work order was issued in favour of the appellant-contractor vide order dated 20.11.2004. 300 days time stipulation was found to be prescribed in the tender document to be reckoned from 15th day of issue of the work order. Dispute cropped up for non-completion of the construction works as stipulated in the work order on the part of the appellant-contractor. Various communications on different dates were made to the contractor to complete the works as per the tender against the work order issued upon the contractor. Some parts of the construction work were undertaken. However, due to alleged non-performance of work by the contractor, the respondent No. 2 rescinded with the contract vide letter dated 18.06.2009, wherein the security deposit of the contractor-appellant was also forfeited leading the parties to take recourse of an arbitration proceedings. 5. Arbitrator was appointed duly. In course of arbitration proceedings, claimant-contractor submitted statement of facts along with supported documents. The respondents also submitted counter statement of facts along with the relevant documents in support of their statement of facts. On hearing both the parties, the learned Sole Arbitrator framed the following issues: "i. Whether the claimant is entitled payment for work executed after 5th R.A. Bill? ii. The respondents also submitted counter statement of facts along with the relevant documents in support of their statement of facts. On hearing both the parties, the learned Sole Arbitrator framed the following issues: "i. Whether the claimant is entitled payment for work executed after 5th R.A. Bill? ii. Whether the claimant is entitled payment for extra items as was detailed in the letter dated 24.10.2007 from the respondent? iii. Whether the claimant is entitled an amount of Rs. 3,03,936/- as escalation under Clause-10 CC for the work executed and paid upto 5th R.A. Bill? iv. Whether the claimant is entitled escalation for the works executed after 5th R.A. Bill from the respondent? v. Whether the claimant is entitled loss of profit @20% on unexecuted portion of the work of the Agreement? vi. Whether the claimant is entitled to get the entire security money which is approximately an amount of Rs. 1,80,000/- now lying with the Department? vii. Whether the claimant is entitled to get return of the materials now lying at the site of work which were under lock & key of the claimant as detailed in the letter dated 28.8.2010? viii. Whether the claimant is entitled interest @12% per annum for all amount counting from the date of cancellation of work till realization? ix. Whether the claimant is entitled cost of litigation of incidental for an amount of Rs. 25,000/- (Rupees Twenty-five thousand) only." 6. After hearing the parties and considering the evidence on record, the learned Sole Arbitrator had passed the award on 17.08.2015. 7. From the arbitral award it appears that the learned Sole Arbitrator has given the award in favour of the contractor-appellant against issue No. I for Rs. 24,639/-, issue No. II for Rs. 5,272/-, issue No. VII for Rs. 10,000/- and issue No. VIII for Rs. 8,995/-, i.e. the total awarded amount is Rs. 48,906/-. 8. The arbitral award dated 17.08.2015, passed by the Sole Arbitrator was challenged by the present appellant by means of filing an application under Section 34 of the Arbitration Act before the Court of learned District Judge, Unakoti Judicial District, Kailashahar which was registered as Title Suit No. 1(ARB) of 2015. 9. The State respondents, being the Opposite Parties contested the said suit by filing written statement. The learned Judge has framed issues and recorded evidence of the parties to the lis. 9. The State respondents, being the Opposite Parties contested the said suit by filing written statement. The learned Judge has framed issues and recorded evidence of the parties to the lis. Having taken into consideration all factual and legal aspects of the suit, the learned District Judge has held that the arbitration proceeding and the consequent award in the instant case are in order and inference is not warranted and further has held that the award passed by the Sole Arbitrator in Arbitration Proceeding No. 1/ARB/BPD/2011 stands good and thus dismissed the suit on contest. 10. Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Arbitration Act") deals with the scopes of challenging the arbitral award. This Court while exercising its jurisdiction under Section 37 of the Arbitration Act has to circumvent within the scopes as provided in Section 34 of the said Act. Before entering into the merit of the case, the relevant part of the provisions of Section 34 of the Arbitration Act may reproduced here-in-below for convenience: "34. This Court while exercising its jurisdiction under Section 37 of the Arbitration Act has to circumvent within the scopes as provided in Section 34 of the said Act. Before entering into the merit of the case, the relevant part of the provisions of Section 34 of the Arbitration Act may reproduced here-in-below for convenience: "34. Application of setting aside arbitral award.--(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3) (2) An arbitral award may be set aside by the Court only if-- (a) the party making the application furnishes proof that-- (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that-- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. [Explanation 1.-- For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.] [Explanation 2.--For the avoidance of doubt, the rest as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.]" From a bare reading of the provisions of Section 34 of the Arbitration Act, this Court has very limited power in exercise of its jurisdiction under Section 37 of the Arbitration Act. 11. At the outset, we have meticulously perused the arbitral award dated 17.08.2015 which was under challenge before the learned District Judge. We have found that all the materials brought on record by both the parties and the legal questions as canvassed before the learned Sole Arbitrator were taken into account by the Sole Arbitrator. There was no violation of the principles of natural justice. It is a well reasoned order. 12. We have also perused the judgment dated 14.09.2018 passed by the learned District Judge. The learned District Judge also had taken into consideration all the issues framed at the instance of the parties to the lis. The learned District Judge has held that the contractor-opposite party has failed to substantiate his claim by producing documentary evidence. After issuance of the work order, the State respondents had given enough opportunities to the contractor, appellant herein to execute the work but the contractor has failed to discharge his liability to execute the works in terms of the tender. It has further been held that the contractor is not entitled to get any amount for the works and he failed to execute the work due to his negligent conduct and not due to the fault of the Department concerned i.e. the State respondents. The learned District Judge has held that the work has been rescinded after observing all codal formalities and the security money has also been forfeited in terms of the contract laid down specifically in the tender document. The learned District Judge has held that the work has been rescinded after observing all codal formalities and the security money has also been forfeited in terms of the contract laid down specifically in the tender document. The learned District Judge did not find any reason to interfere with the arbitral award and hence, dismissed the suit filed by the appellant herein. 13. Having regard to the scope of interference under Section 34 of the Arbitration Act, we do not find any material that any of the parties was under some incapacity. It is not the case of the appellant that the Arbitration Agreement is invalid under the law in any manner whatsoever. The parties in the instant case had participated in the proceedings and all reasonable opportunities were provided to the appellant as well as the State respondents to substantiate their respective claims. The disputes and the issues referred to and decided by the Sole Arbitrator as well as the learned Court below are well within the ambit of the terms and conditions laid down in the tender document. 14. In course of hearing before this Court Mr. Chakraborty, learned Sr. counsel appearing for the appellant could not raise any such plea that any part of the arbitral award which contains decision on matters not submitted to arbitrator. We reiterate that after perusal of the arbitral award we do not find any such material that the Sole Arbitrator has not dealt with any of the issues or the disputes, referred to him. Mr. Chakraborty, learned Sr. counsel in course of argument has only tried to persuade this Court that the forfeiture of the security deposit is illegal and arbitrary and does not call for and the Sole Arbitrator ought to have released the security deposit in favour of the appellant. On the same pretext, the learned Sr. counsel has also urged before this Court that the finding of the learned District Judge rejecting the prayer of the appellant to set aside the order of forfeiture of security deposit of the appellant is illegal and arbitrary. On the same pretext, the learned Sr. counsel has also urged before this Court that the finding of the learned District Judge rejecting the prayer of the appellant to set aside the order of forfeiture of security deposit of the appellant is illegal and arbitrary. We do not find any substance in the said submission of the learned senior counsel for the reason that both the Sole Arbitrator as well as the learned District Judge after considering all the issues framed in course of the proceeding, have held that the works awarded in favour of the contractor-appellant could not be executed only due to the fault and negligence on the part of the appellant-contractor and the Departments concerned were not in any way responsible for non-execution of the works. Records reveal that the Departments concerned i.e. the State respondents had offered enough opportunities to the appellant to execute the works in terms of the contract, but he failed to do so. 15. Keeping in mind the scopes of interference as provided in Section 34 of the Arbitration Act, we may profitably refer the case of State of U.P. v. M/s. Ram Nath International Const. Pvt. Ltd. reported in AIR 1996 SC 782 , where the Apex Court observed that the jurisdiction of the Court to interfere with an award of an arbitrator is undoubtedly a limited one. The adjudication of the arbitrator is generally binding between the parties and it is not open to the Court to attempt to prove the mental process by which the arbitrator has reached his conclusion. 16. In the case of M/s. J.G. Engineers Pvt. Ltd. v. Union of India reported in AIR 2011 SC 2477 , the Apex Court has held that a Civil Court examining the validity of an arbitral award under section 34 of the Act exercises supervisory and not appellate jurisdiction over the awards of an arbitral tribunal. A court can set aside an arbitral award, only if any of the grounds mentioned in sections 34(2)(a)(i) to (v) or section 34(2)(b)(i) and (ii), or section 28(1)(a) or 28(3) read with section 34(2)(b)(ii) of the Act, are made out. An award adjudicating claims which are 'excepted matters' excluded from the scope of arbitration, would violate section 34(2)(a)(iv) and 34(2)(b) of the Act. 17. An award adjudicating claims which are 'excepted matters' excluded from the scope of arbitration, would violate section 34(2)(a)(iv) and 34(2)(b) of the Act. 17. In our considered view, keeping in mind the spirit and object of Section 34, it is not the duty of Civil Court to look into the reasonableness of reasons as given by the Sole Arbitrator even in a case where the award is challenged on the ground that the award is erroneous, the arbitration court would not interfere with such award if it is found that the award is otherwise proper and all the relevant records including the relevant documents brought on record are taken into account by the Sole Arbitrator. It is not open to the arbitration court to re-appreciate the reasonableness of reasons in the arbitral award as this Court does not exercise its appellate power but only supervisory power. (emphasis supplied) In the present case, having found the award dated 17.08.2015 is proper and in order in all respects, the said award does not call for any interference by this Court. 18. Accordingly, we affirm and upheld the arbitral award dated 17.08.2015, passed by the Sole Arbitrator as well as the judgment dated 14.09.2018, passed by the learned District Judge affirming the arbitral award. In the result, the appeal filed by the appellant before this Court stands dismissed.