Additional Chief Engineer, Department of Irrigation v. Goel Brick Industries
2021-02-23
I.MAHANTY
body2021
DigiLaw.ai
JUDGMENT : I. Mahanty, J. 1. Instant misc. appeal has been filed by the appellants-Department against the judgment dated 04.05.2011 passed by the learned Additional District Judge No. 1, Bharatpur in Civil Misc. Case No. 01/2008, whereby the objections filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') were dismissed. 2. The facts, in brief, are that the Superintending Engineer, Irrigation Circle, Bharatpur issued NIT in 2003 for rehabilitation work of three numbers main canal and Mandapura Minor of Bund Baretha under the Rajasthan Water Sector Restructuring Project. Pursuant to said NIT, the respondent No. 1, claimant, submitted its tender, which was accepted by the appellant and an agreement No. 1/2003-04 was executed between the appellant No. 2 and the respondent No. 1-contractor for the said work. The total cost of the work was Rs.2,38,88,604/-. As per the terms of the agreement, the work was to be completed within 24 months from the date of placement of order. The date of commencement of work was fixed as 10.04.2003 and completion of work as 09.04.2005. However, the stipulated period was extended till 09.07.2005. The respondent executed a part of the work and did not complete the whole work. The respondent was paid Rs.1,49,78,507/- against the work executed by it. 3. Since some dispute and differences arose between the parties regarding the construction works, Shri M.B. Mathur, retired Superintending Engineer, Irrigation Department was appointed as Adjudicator on 30.10.2004, as per clauses 24 and 25 of the said agreement. The claimant-respondent No. 1 filed claim before the Adjudicator for a sum of Rs.62,45,652/- under various heads. The appellant No.2 filed application on 23.02.2006 raising preliminary objection regarding expiry of term of appointment of Adjudicator. Vide order dated 07.03.2006, the Adjudicator decided the matter and directed that respondent No.1 was entitled to receive Rs.74,59,635/- with further direction for release of the bank guarantee of Rs.28,70,430/- from the appellants with interest @ 12% per annum. 4. Aggrieved with the order of the Adjudicator, the Department sought for appointment of sole Arbitrator in terms of clause 25.2 of the agreement as the decision of the Adjudicator was beyond the terms of the agreement. The sole Arbitrator was appointed on 13.10.2006. 5. The learned sole Arbitrator passed an award on 13.09.2007, which was amended on 09.10.2007, correcting some clerical errors.
The sole Arbitrator was appointed on 13.10.2006. 5. The learned sole Arbitrator passed an award on 13.09.2007, which was amended on 09.10.2007, correcting some clerical errors. The sole Arbitrator awarded to the respondent No. 1 a sum of Rs. 65,74,655/-, interest @ 12% per annum amounting Rs. 9,53,164/- be paid for pre-reference period and interest @ 12% per annum shall be paid for pendente-lite and for future till realization of payment. The bank guarantee was directed to be released. 6. Aggrieved by the award of the sole Arbitrator, the appellants submitted objections under Section 34 of the Act before the learned Additional District Judge No. 1, Bharatpur. 7. A reply to the objections was filed by respondent No. 1 contending inter alia that the award of the sole Arbitrator is just, proper & reasonable and is in conformity with the provisions of the Act. The sole Arbitrator has considered all aspects of the matter and passed the award upon evaluation of all the materials available on record, including the measurements indicated in the measurement book, in right perspective. The award does not suffer from the vice of arbitrariness. Hence, it was prayed that the objections may be rejected. 8. After hearing the parties, the learned Additional District Judge No. 1, vide impugned judgment dismissed the objections filed by the appellants. Hence, this appeal. 9. The learned counsel for the appellants has submitted that the award passed by the sole Arbitrator is contrary to the terms and conditions of the agreement. The Adjudicator while passing the award exceeded jurisdiction conferred under clause 24.1 of the agreement. Similarly, the sole Arbitrator also acted beyond the jurisdiction provided under clause 25 of the agreement. The sole Arbitrator has erroneously held that it cannot decide the issue of recovery of Rs. 23,78,853.05 by the Department as it was not raised before the Adjudicator. Such an interpretation means that the Adjudicator was exercising all the powers. If it is to be believed that the Arbitrator is to hear and decide only those issues raised before the Adjudicator, then the agreement shall be hit by Section 34(2)(ii) of the Act. As per the provisions of the Act and the contract, the Arbitrator is empowered to decide all issues raised by any of the parties before it. According to the appellants, no person can be left remediless and no issue can attain finality without proper adjudication.
As per the provisions of the Act and the contract, the Arbitrator is empowered to decide all issues raised by any of the parties before it. According to the appellants, no person can be left remediless and no issue can attain finality without proper adjudication. In the instant case, the sole arbitrator has failed to apply his mind on the issues raised by the Department saying that the Department did not have the right to lay any claim with regard to the recovery that was being sought for before the arbitrator. Refusal to arbitrate on all issues amounts to inequality of bargaining power. Accessibility to dispute resolution is an inherent rights of parties to a contract. The aforesaid aspects were not appreciated by the learned Additional District Judge while dismissing the objections. Learned Additional District Judge as well as the sole arbitrator have erred in not considering the fact that excess payment has been made to the claimant-respondent No. 1, as is evident from the measurement book and passed the award in a casual manner without due application of mind to the facts available on record. The fact that the construction work was not completed within the stipulated period and the fact that delay in completing the work was on the part of the respondent No. 1 contractor, have not been considered while passing the impugned award and judgment. It was further submitted that the arbitral award is in conflict with the public policy of India. 10. Learned counsel for respondent No. 1 has submitted that the impugned judgment has been passed by the learned Additional District Judge after careful consideration of each and every aspect of the matter and no fault can be found in it. The impugned judgment is eminently just and proper and does not suffer from any infirmity or illegality so as to call for any interference by this Court. It was further submitted that the scope under Section 34 of the Act is very limited and while dealing with the objections, the Courts shall not act like an appellate Court. Re-appreciation of arbitral award is outside the ken of Section 34 of the Act. The proceedings under Section 34 of the Act are summary proceedings and where the view taken by the Arbitrator is a possible view, no interference should be made in arbitral award.
Re-appreciation of arbitral award is outside the ken of Section 34 of the Act. The proceedings under Section 34 of the Act are summary proceedings and where the view taken by the Arbitrator is a possible view, no interference should be made in arbitral award. In these circumstances, the award of the sole arbitrator and the judgment of the learned Additional District Judge require no interference as there exists no illegality or perversity. 11. Heard learned counsel for the respective parties and carefully gone through the material available on record. 12. To deal with the present controversy, Section 34 of the Act would be relevant, which reads thus:- "34. Application for 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).
12. To deal with the present controversy, Section 34 of the Act would be relevant, which reads thus:- "34. Application for 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) a 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 consonance 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 public policy of India. Explanation.- Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81." 13.
Explanation.- Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81." 13. Learned Additional District Judge, after considering the provisions of Section 34 of the Act, was of the view that scope of Section 34 is very limited to the provisions as contained in Section 34(2) of the Act and the objections, so raised by the appellants, were beyond the jurisdiction/grounds mentioned in Section 34(2), on the basis of which only an award can be set aside. That apart, after considering the judgments cited by the respondents, it was observed that an award cannot be set aside on the ground of insufficient evidence and further if the question of jurisdiction was not raised before the Arbitrator, the same cannot be raised before the Court. 14. Hon'ble the Supreme Court in the case of P.R. Shah, Shares And Stock Brokers Private Limited Vs. B.H.H. Securities Private Limited & Ors., (2012) 1 SCC 594 , while considering the provisions of Section 34 of the Act, has enumerated the powers of the District Judge and has held in para 21 as under:- "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............... 15. In the considered view of this Court, the learned Additional District Judge after proper appreciation of the facts and the evidence available on record, has rightly dismissed the objections raised by the appellant against the award dated 13.09.2007 passed by the Arbitrator. 16. This Court cannot be expected to sit in appeal over the impugned findings or to re-appreciate the evidence as an Appellate Court. No ground, as contained in Section 34(2) of the Act, is made out to set aside the award. There is no illegality or perversity in the impugned judgment which requires any interference by this Court. 17. Consequently, the present appeal fails being devoid of merit and is hereby dismissed. The award be executed forthwith.