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2024 DIGILAW 1600 (GUJ)

Board of Trustees of Deendayal Port v. M. S. Khurana

2024-07-23

PRANAV TRIVEDI, SUNITA AGARWAL

body2024
ORDER : Pranav Trivedi, J. 1. The present First Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 ( hereinafter referred to as the “Act of 1996”) impugn the judgment and order dated 31.12.2022 passed by Additional District Judge, Gandhidham-Kachchh in Civil Misc. Application (Arbitration) No. 21 of 2021, whereby the learned Judge rejected the application filed under Section 34 of the Act of 1956 and confirmed the arbitral award dated 01.03.2013. 2. The relevant facts in the present case are that the appellant is a body Corporate constituted under the Major Port Trust Act, 1963 working under the direct control of Ministry of Shipping, Government of India. The respondent is a Partnership Firm, who was granted with tenderer work by the appellant vide work order dated 16.11.1999 with instructions to commence the work from 01.12.1999. The time-line to complete the same was within one year. The work order constitute of construction of ‘Central Road, behind 6th and 7th Cargo Berth Area at New Kandla (Stage-III)’. Due to delay in work order, dispute arose between the appellant and the respondent. This resulted into appointment of sole-arbitrator on 28.09.2012 for deciding the dispute in question. The sole-arbitrator concluded the proceedings and published the award on 01.03.2013 and ordered payment of Rs.30,51,374/- along with interest at the rate of 12% till the payment was made. The award dated 01.03.2013 was challenged by way of preferring Civil Misc. Application (Arbitration) No. 21 of 2021 under Section 34 of the Arbitration Act. The learned Judge by way of impugned order dated 31.12.2022 dismissed the application which has culminated into filing of the present appeal. 3. We have heard Ms. Aishwarya Gupta, learned advocate for the appellant and Mr. Nikunt Raval, learned advocate holding the brief of Mr. Vidit Sharma, learned advocate for the respondent. 4. Ms. Aishwarya Gupta, learned advocate for the appellant has submitted that the contentions as raised by the appellant are not recorded by the learned Arbitrator. There was a specific issue of delay in execution of the work. The appellant has clearly come out with the case that delay in work was not properly addressed by the respondent. It is the case of the appellant that this issue has not been specifically recorded and dealt with by the learned Arbitrator. On this limited point, Ms. Aishwarya Gupta has requested to allow the appeal. 5. Per contra, Mr. The appellant has clearly come out with the case that delay in work was not properly addressed by the respondent. It is the case of the appellant that this issue has not been specifically recorded and dealt with by the learned Arbitrator. On this limited point, Ms. Aishwarya Gupta has requested to allow the appeal. 5. Per contra, Mr. Nikunt Raval learned advocate for the respondent has contended that all the claims are dealt with by the learned Arbitrator and subsequently allowed. The contention raised by the appellant are recorded and specific finding has been given. On the aspect of delay, a specific case is made by the respondent that site was not made available by the appellant. The appellant has not given any specific assertion that the site was indeed made available to the respondents. Therefore, the issues raised by the appellant are baseless and are required to be rejected summarily. 6. Having heard the learned advocates for both the sides and having gone through the record, it can be perused that the learned Arbitrator has framed 8 issues and has specifically given findings on such 8 issues. The sole contention raised by the appellant was on the aspect of delay being not dealt with by the learned Arbitrator. The learned Arbitrator has primarily framed first 2 issues on merits, including the issue of delay. There are specific findings given on such issues and the contentions raised by the appellant are considered. Therefore, it cannot be observed that there was perversity in the award passed by the learned Arbitrator. It is trite law that the Court cannot sit in appeal over Arbitral award. It is not permissible to reappreciate the evidence on record. By catena of decision of the Hon'ble Apex Court, the scope of interference under Sections 34 and 37 of the Arbitration Act is very limited. Further, it is well settled that the award cannot be interfered on specific interpretation of contract or document where two views are possible. In the present case, learned advocate for the appellant could not make out any case with regard to illegality in the Arbitral award. Emphasis of the learned advocate for the appellant was on the sole ground of nonconsideration of certain issues of delay. On perusal, it can be categorically found that the learned Arbitrator has dealt with all the issues as raised by the appellant. Emphasis of the learned advocate for the appellant was on the sole ground of nonconsideration of certain issues of delay. On perusal, it can be categorically found that the learned Arbitrator has dealt with all the issues as raised by the appellant. In view of the same, it is not permissible under Sections 34 and 37 of the Arbitration Act to reappreciate the evidence. 7. We may note the decision of the Apex Court in UHL Power Company Limited vs. State of Himachal Pradesh reported in [ (2022) 4 SCC 116 ], wherein the Apex Court has held that the jurisdiction conferred on the Courts under Section 34 of the Arbitration Act is fairly narrower, when it comes to the scope of exercise of powers under Section 37 of the Arbitration Act. Noticing its earlier decision in MMTC Ltd. vs. Vedanta Ltd., reported in [ (2019) 4 SCC 163 ], it was noticed that the reasons for vesting such a limited jurisdiction on the Courts in exercise of powers under Section 34 of the Act, 1996, have been explained therein in para ‘11’ as under :- “11. As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2) (b) (ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the “fundamental policy of Indian law” would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, “patent illegality” itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.” 28. By referring to various decisions of the Apex Court, it was noticed from para Nos. Furthermore, “patent illegality” itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.” 28. By referring to various decisions of the Apex Court, it was noticed from para Nos. ‘18’ to ‘21’in UHL Power Company Limited (supra) that it has been held time and again by the Apex Court that if there are two plausible interpretations of the terms and conditions of the contract, then no fault can be found, if the Arbitrator proceeds to accept one interpretation as against the others. The construction of the terms of contract is primarily is for an Arbitrator to decide unless the Arbitrator construes the contract in such a way that it could be said to be something that no fair-minded or reasonable person could do. It was further noted that when the Court is applying “ ’public policy test’ to the arbitration award, it does not act as a court of appeal and consequentially, errors on facts cannot be corrected”. A possible view by the learned Arbitrator on facts has necessarily to pass muster as the Arbitrator is the ultimate master of the quality and quantity of evidence to be relied upon when he delivers his arbitral award. Thus, the award based on little evidence or on evidence which does not measure up in quantity to a trained legal, would not be held to be involved on this score. 29. The requirement is that the Arbitral Tribunal must decide in accordance with the terms of the contract, but if the test is that arbitral tribunal must decide in accordance with the terms of the contract, but if term of the contract is construed in reasonable manner within the award ought not to be set aside on the ground of unreasonableness only. It was further noticed in paragraph Nos. 20 and 21 as under :- “20. In Dyna Technologies (P) Ltd. (supra), the view taken above has been reiterated in the following words: “25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. 20 and 21 as under :- “20. In Dyna Technologies (P) Ltd. (supra), the view taken above has been reiterated in the following words: “25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.” 21. An identical line of reasoning has been adopted in South East Asia Marine Engg. & Constructions Ltd.[SEAMAC Limited] V. Oil India Ltd. and it has been held as follows: “12. It is a settled position that a court can set aside the award only on the grounds as provided in the Arbitration Act as interpreted by the courts. Recently, this Court in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1 : 2019 SCC OnLine SC 1656 laid down the scope of such interference. This Court observed as follows : (SCC pp. 11-12, para 24) 24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.” 13. It is also settled law that where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.” 13. It is also settled law that where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. This Court in Dyna Technologies (2019) 20 SCC 1 : 2019 observed as under : “25. Moreover, umpteen number of judgments of this Court have categorically held that the Court should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.” [emphasis supplied]” 8. In MMTC Ltd. (supra), the Apex Court on the scope of interference with an order made under Section 34, as per section 37, has held that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. The relevant para 14 in MMTC Ltd. (supra) be noted :- “As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the Court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the Court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the Court under Section 34 and by the Court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.” 9. Thus, it is evident that in case an arbitral award has been confirmed by the Court under Section 34 and by the Court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.” 9. In Project Director, National Highways No. 45E and 220 National Highways Authority of India vs. M. Hakeem and Another reported in [ (2021) 9 SCC 1 ], the Apex Court while considering the question of scope of the powers of the Courts under Section 34 of the Act, 1996 to set aside the award of the Arbitrator including the power to modify such award, considered its earlier decision in MMTC (supra) to record that it is settled that the Section 34 proceedings does not contain any challenge on the merits of the award. It was held that Section 34 of the Arbitration Act, 1996 vary from being in the nature of appellate provisions. It provides only for setting aside the awards only on very limited grounds, as contained in Sub-sections (2) and (3) of Section 34. The recourse to the Court against arbitral award may be made only by application for setting aside such award in accordance with Sub-sections (2) and (3). It was observed that Section 34 of the Act, 1996 is modelled on the UNCITRAL Model Law on International Commercial Arbitration, 1985, under which no power to modify the award is given to the Court hearing a challenge to an award. Statutory scheme under Section 34 of the Act, 1996 is in keeping with the UNCITRAL Model Law and legislative policy of minimal judicial interference in arbitral awards. Referring to the decision of the Apex Court in McDermott International Inc. vs. Burn Standard Co. Ltd. reported in [ (2006) 11 SCC 181 ], it was noticed that 1996 Act makes provisions for supervisory role of the Courts in the review of the arbitral award only to ensure fairness. Interference of the Courts is envisaged in few circumstances only, like in case of fraud or bias of the Arbitrator, violation of principles of natural justice etc.. The Courts cannot correct the terms of the Arbitrator. It can only quash the awards leaving the parties to begin with the arbitration again, if it so desires. Interference of the Courts is envisaged in few circumstances only, like in case of fraud or bias of the Arbitrator, violation of principles of natural justice etc.. The Courts cannot correct the terms of the Arbitrator. It can only quash the awards leaving the parties to begin with the arbitration again, if it so desires. The scheme of the provisions, namely Sections 34 and 37 of the Act, 1996, thus, aims at keeping supervising role of the Courts at minimum level and this can be justified, as the parties to the agreement make a conscious decision to exclude the Court’s jurisdiction by opting for arbitration as they prefer expeditious and finality over by it. It was, thus, held that there can be no doubt that given the law laid down by the Apex Court, Section 34 of the 1996 Act cannot be held to include within it a power to modify the award. 10. In view of the same, the First Appeal is devoid of merits and liable to be dismissed. Consequently, the Civil Application also stands disposed of.