JUDGMENT Pradeep Nandrajog, J.
1. U.P. Export Industries Ltd. has filed objections to the award dated 31.10.90 published by Justice J.D.Jain (Retd.).
2. By and under the award, 4 sums, besides interest and Rs. 10,000/- towards cost of arbitration have been awarded to the non-objector, D.Dalip.
3. The sums awarded are as under:
I Rs. 12,900/- under claim under 1(a) representing 3 month wages+ house rent for three months.
II Rs. 29,000 under claim no. 2(a) and (b) on account of royalty calculated @ Rs. 500/- per month for a period of 4 years and 10 months.
III Rs. 50,000/- or return of 250 pieces of pottery under claim under 2(c). (In event of non return of pottery pieces, each was valued at Rs. 200/-.) IV Rs. 20,000/- on account of loss stated to have been suffered by D.Dalip holding that the objector was in breach of Clause 7 of the agreement between the parties.
4. Back drop of the dispute as emerges from the pleading of the parties and the award is that D.Dalip, a ceramic designer cum pottery artist entered into an agreement with U.P.Export Industries Ltd. on 14.10.83. Duration of the agreement was three years terminable at option of U.P. Export Industries Ltd. by giving a three months notice.
5. D. Dalip rendered services for about 2 years and 5 months when, vide letter dated 11.01.86, services were terminated with immediate effect.
6. D. Dalip questioned the termination pleading that till 3 years was over, his services could not be terminated. He claimed as compensation balance salary plus house rent allowance in terms of Clause 2 and 3 of the agreement dated 14.10.1983.
7. There were additional claims on account of the fact that Clause 7 of the agreement between the parties stipulated that U.P. Export Industries Ltd. would facilitate exposure to D. Dalip by sending him for training or collaboration with companies in Finland from time to time. He would be encouraged to hold regular exhibitions of his new collections both in India and abroad. D.Dalip alleged that during course of employment, this benefit or facility was not extending to him and as a result, he could not sharpen his skills. Being a professional, it retarded his professional growth.
8. He had an additional claim under Clause 10 of the agreement which stipulated that in case of termination of contract, D. Dalip will continue to get the royalty as provided under Clause 5 of the agreement. Clause 5 of the agreement stated that in respect of the pottery designed by D. Dalip, as and when commercial production would commence, he would get royalty @ 3% of the ex- factory's sales value subject to a maximum of Rs. 1800/- per month starting after 3 months of initial production.
9. Certain clauses of the agreement in question were amended by a supplementary agreement dated 30.11.83. Clause 5 was amended to increase the royalty from 3% to 5%.
10. Agreement was terminated on 11.01.1986 due to an unfortunate incident. On 8.1.86, when D. Dalip was leaving the factory premises of U.P. Export Industries Ltd., one Sh. Vijay Aggrawal employed as an Assistant at the factory found that he was carrying with him 7 newly test produced pieces of pottery. D. Dalip was not having any challan authorizing him to take 7 pottery pieces outside the premises of the factory. Thereafter he got a challan prepared. D. Dalip took out the pottery pieces. On 9.1.86, he was denied entry in the factory. On 11.1.86 the letter of termination was issued. It was alleged against him that it had come to the notice of the management that he had been taking out pottery pieces from the factory without proper authorization and was selling the same privately at various exhibitions, last being the exhibition held at AIFAC Gallery, New Delhi being the third exhibition held in 1986.
11. Parties could not mutually settle their disputes. Since agreement between the parties contained an arbitration clause, D. Dalip moved this Court under Section 30 of the Arbitration Act, 1940. Justice J.D.Jain (Retd.), a former Judge of this Court was appointed as the sole arbitrator.
12. Of the various issue debated before the learned arbitrator, one issue was to the nature of the employment of D.Dalip. Was it a contract of employment or was it a contract for employment
13. Learned arbitrator has discussed the law on the issue, what constitutes master and servant's relationship Degree of control exercised by a master over a servant viz.-a.-viz. independence of the employee were considered by the learned arbitrator. Learned arbitrator has noted following clauses of the agreement between the parties:
2. The appointment will be effective from 1st December 1983 and 'the Designer' will be paid a consolidated fee of Rs. 1800/- per month for his exclusive services to be rendered to 'the company'. 'The designer' will be Designer-cum-Production in charge of the hand made pottery and ceramic unit of 'the company' and will be assisted by various craftsmen and potters to be provided by 'the Company'.
3. 'The Designer' will be provided accommodation of one bed room apartment with kitchen at the expenses of 'the Company' at Delhi.
x x x x x x x
5. For all designs executed by the Designer', and which are put into production by 'the Company' 'the Designer' will receive a royalty @ 3% of ex- factory sales value subject to a maximum of Rs. 1,800/- per month starting after 3 months of initial production.
x x x x x x x
7. The company will provide exposure to 'the Designer' in the international market and also he will be sent for training with the collaborators of 'the Company' in Finland from time to time. The Company would also encourage 'the Designer' to hold regular exhibitions of his new collections, both in India and abroad.
8. This agreement will be valid for 3 years from the date of its execution and may further be extended by mutual consent. The agreement may be terminated at the option of 'the Company' by giving 3 months notice to 'the Designer'.
x x x x x x x
10. In case of the termination of the contract 'the Designer' will continue to get the royalty, as enumerated in Clause No. (5) will keep on producing the said product.
14. Learned Counsel for the parties agree that in view of the fact that D. Dalip has not raised any objections to the award, in light of the consequential findings, issue whether nature of employment was a contract of service or contract for service becomes irrelevant for the reason learned arbitrator has not awarded any damages to D.Dalip for the remaining period of his service. Damages have been restricted to 3 month wages+ house rent allowance.
15. Contract agreement between the parties stipulated that in case of pre- mature termination, 3 months notice has to be issued by U.P. Export Industries Ltd. In view of said clause, holding it not to be a case of fundamental breach of obligation, learned arbitrator has held that three months wages plus house rent allowance had be paid.
16. It is settled law that where a party to a contract is in fundamental breach of the terms of the contract, it relieves the opposite party to comply with the reciprocal obligations under the contract. In such a case, opposite party stands relieved of its obligations and at its option can avoid the contract.
17. In relation to a contract of service, this principle of law would mean that where the employee is in fundamental breach of the contract of employment, employer would be absolved of his reciprocal obligations under the contract. If reciprocal obligation obliges the employer to give a notice and after expiry of the agreed period, to terminate the services, employer would be entitled not to give such notice nor wait for period to lapse only if the employee is in fundamental breach.
18. For example, a security guard, if found breaking into the premises which he is supposed to protect would be liable to have services terminated forthwith because he would be in fundamental breach of the contract. But where allegation is that he was not attentive when posted at duty, it may a debatable issue. In such case, notice of termination as per contract would have to be issued.
19. Learned arbitrator has found that D.Dalip was in fact carrying out with him 7 pieces of pottery for which he had not obtained any permission. Arbitrator has also found that in the past, D.Dalip had taken out pottery pieces for being shown in exhibitions in various places. But, on factum of intention, learned arbitrator has opined that in view of the language of Clause 7 of the agreement between the parties, possibility of D.Dalip forming an opinion that he was entitled to take out pottery pieces and have them displayed in exhibitions could not be ruled out. Learned arbitrator has held that though wrong, it could not be said that D.Dalip committed act of the impropriety of a kind which was a fundamental breach of obligation, in that, learned arbitrator has held that means read was missing.
20. Learned arbitrator has construed the agreement between the parties as per which professional and personal competence of D.Dalip in designing pottery has been noted. That pottery designed and created by him would be property of the employer has been noted. That the employer would render assistance to D.Dalip in acquiring further skill and international fame has also been noticed. That D. Dalip was to get a monthly remuneration plus house rent allowance and royalty when pottery designed by him would be commercially sold has also been considered by the learned arbitrator.
21. On an overall purview of evidence led, learned arbitrator has opined that in view of Clause 7 of the agreement and in particular the lose and laconic language thereof it could not be said that D.Dalip had committed any theft.
22. As a consequence, learned arbitrator has held that D.Dalip was entitled to a three months notice before his service could be terminated. Accordingly, three months wages together with house rent allowance has been awarded.
23. Sh. Subhro Sanyal learned Counsel for the objector urged that the learned arbitrator has ignored a material document, being an incriminating letter written by D.Dalip acknowledging that he was ready to reimburse the objector.
24. The said letter is Exhibit C-83. It is dated 9.1.86.
25. The letter in question has been written by D. Dalip a day after he was denied entry into premises.
26. A perusal of the award shows that the learned arbitrator has referred to the said letter at page 25 of the award. It is thus not a case where a material evidence has been ignored by the learned arbitrator.
27. Objection urged by Sh. Sanyal is that the finding recorded in the last two lines of page 25 of the award where it is noted that there is no iota of evidence to connect claimant with theft or misappropriation cannot be sustained in light of Exhibit C-83.
28. An award like a court decision has not to be read nor understood as a statute. It does happen that while pronouncing a decision or render an opinion, words which come to the mind at the first blush are uttered without realizing the exact sweep or span of the words. It is more pronounced in this country whether judicial forums are flooded with docket explosion. Who gets the time to refine ones decisions This is the reason why constituent judicial view in India is that judicial decisions or decisions of judicial authorities or authorities akin thereto would not be construed literally nor would they be construed as a statute.
29. What the learned arbitrator intends to convey is to be meaningfully gathered from the discussion where learned arbitrator refers to Clause 7 of the agreement between the parties and in light thereof the conduct of D.Dalip.
30. It is settled law that unless a finding is perverse, it would not be interfered with. While appreciating evidence, a wrong finding as long as it is not perverse is acceptable.
31. An arbitrator is a form chosen by parties with a consent. An arbitrator is not expected to do absolute justice. As long as an arbitrator has done rough justice, it would be good. As long as an arbitrator has given a fair hearing to the parties and has fairly considered the material on record and has rendered a decision on facts which is a bona fide decision it would be good.
32. Save and except, perversity or appreciation of evidence, decision of an arbitrator is final. Perversity would also include ignoring material documents or material evidence.
33. Decision cited by learned Counsel for the objector being AIR 1979 SC 1828 Abdul Wahed v. State of Maharashtra is not applicable on the facts and circumstances of the present case. The said decision deals with power of termination. It deals with statutory rules governing right of an employer to terminate an employee.
34. In matters relating to termination, each decision would be peculiar to the facts which were before the court on which decision is predicated.
35. Laying a challenge to grant of royalty to D.Dalip, a two-fold objection has been raised. The first objection raised is to the quantification thereof in sum of Rs. 500/- per month. The second is by laying a challenge to Clause 10 of the contract.
36. As noted above, Clause 10 of the contract states that notwithstanding termination of service of D.Dalip, he would continue to receive royalty in respect of works i.e. pottery articles created by him and commercially sold by U.P. Export Industries Ltd.
37. Submission made is that the said clause operates post contractual obligations of the parties coming to an end and therefore would be hit by Section 27 of the Indian Contract Act. I am afraid, this objection was not urged before the learned arbitrator and therefore, does not find mention in the award. Be that as it may, post employment clauses or post contractual clauses which are negative covenants and are in restrain of trade would attract Section 27 of the Contract Act.
38. The clause in question is not a negative covenant. It restrains neither party. It casts a positive mandate on U.P. Export Industries Ltd. to pay royalty to D.Dalip.
39. On the issue of quantification, it is true that there is no evidence to quantify the royalty, but in case of the kind, direct evidence would hardly be forthcoming on record. Learned arbitrator has held that after D.Dalip was employed with U.P. Export Industries Ltd. and was able to set up the unit and when time came for the unit to commercially take off services of D.Dalip were disengaged. In that view of the matter, approximate and direct evidence of sale could hardly be found.
40. Sh. Shashivansh Bahadur learned Counsel for Sh. D.Dalip states that motivation was the clause in the contract with limited royalty to Rs. 1800 per month.
41. Clause 5 of the agreement evidences that maximum of Rs. 1800/- per month as royalty would flow to the pocket of D.Dalip. Learned arbitrator has referred to as said clause as an indication of what D.Dalip could earn by way of royalty.
42. I concur with the reasoning of the learned arbitrator.
43. Challenge to the sum of Rs. 50,000/- pertaining to 250 pieces of pottery is once again on the ground that there is no material to show that each article costs Rs. 200/-.
44. As noted above, it was the option of U.P. Export Industries Ltd. to return 200 pieces of pottery created and designed by D.Dalip. Since first option was of U.P. Export Industries Ltd., I see no reason why it should not return the pottery pieces if it found compensatory cost at Rs. 200/- per piece excessive.
45. That leaves the final objection to be decided. Objection relates to the award wherein Rs. 20,000/- have been awarded as compensatory damages for breach of obligation of Uttar Pradesh Industrial Corporation in not complying with Clause 7 of the agreement.
46. Findings of the learned arbitrator on this issue are as recorded on pages 37 and 39 of the award. Learned arbitrator has noted 4 English decisions on the point. Learned arbitrator has held that the intent of the clause was to make available to D.Dalip facilitates to enhance his reputation and skill. It has been held that the employer was obliged to send D.Dalip abroad and in particular for training with a collaborator company in Finland. Learned arbitrator has held that where a job requires skill and employer undertakes to render assistance to the employee to enhance his skill, breach of said obligation resulting in damages to the employee would be evident, in that, in future employment such employee would not have benefit of enhanced skill.
47. Learned arbitrator has noted that the employee led evidence of foreign tours by D.Dalip, but has noted that these visits related to marked survey etc. and were not in relation to sending him for training with the collaborator in Finland.
48. General damages in sum of Rs. 20,000/- have been awarded.
49. There has to be an element of guess work in awarding general damages and in particular where the same are to recompense a person for diminution of his future prospects.
50. Looked at from any angle, I find the award just, fair, reasonable and equitable.
51. I note that on the sums awarded, interest has been awarded to D.Dalip @15% per annum. It is reasonable.
52. I.A. No. 13952/92 is dismissed.
1. Award dated 31.10.90 published by Justice J.D.Jain (Retd.) is made a rule of the court. Decree shall follow. Post decretal interest is awarded on the sums awarded by the learned arbitrator @ 9% per annum from date of decree till date of realization.
2. In the peculiar facts and circumstances, I do not award any costs.