R.K. Khanna And Ors. vs International Airports ...
1994 Latest Caselaw 835 Del

JUDGMENT

Dalveer Bhandari, J.

(1) The petitioner has filed this petition under Section 14 of the Arbitration Act, 1940 for filing the award dated 24th November, 1988 and proceedings before the Court. This Court issued notice to the respondent No. 2, Arbitrator directing him to file award and proceedings in Court. Notice of filing the award was given to both the parties and thereafter both the parties have filed their objections to the award.

(2) The Court framed the following issues :

1. Whether the arbitrator has misconducted in disallowing the claims of the petitioner? 2. Whether the Award in so far as it disallows the claims of the petitioner, suffers from any error apparent on the face of the record? 3. Relief.

(3) The parties were directed to file affidavits by way of evidence within four weeks. The requisite affidavits had been filed and pleadings in the suit are complete, and now the matter had been placed for final disposal in the category of 'Short Cause'.

(4) Brief facts relevant to dispose of the petition are recapitulated as under: The petitioner had submitted a tender to the International Airport Authority of India for the construction of Indira Gandhi Rashtriya Urban Academy at Fursatganj, Rae Bareily, U.P. The tender was accepted on 31st December, 1985 and an agreement was executed between the parties. Clause 25 of the agreement pertains to the arbitration and the. same is reproduced as under: "EXCEPT where otherwise provided in the contract all questions and disputes relating to the meaning of the specification designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question claim, right matter or thing whatsoever, in any way arising out of or these conditions or otherwise concerning the work, or the execution or failure to execute the same whether arising during the progress of the work or after the competition or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Chief Engineer, International Airports Authority of India, in charge of the work at the time of dispute or if there be no the Chief Engineer the administrative head of the Department of Engineering of said Authority at the time of such appointment. It will be no objection to any such appointment that the arbitrator so appointed is an international Airports Authority of India's Employee that he had to deal with the matters to which the contract relates and that in the Course of his duties as International Airports Authority of India's Employee he had expressed views on all or any of the matters in dispute or difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such the Chief Engineer or administrative head of the Department of Engineer of the Authority as aforesaid should act as arbitrator and if for any reason, that is not possible the matter is not to be referred to arbitration at all. In all cases where the amount of the claim' in dispute is Rs. 50,000.00 and above, the arbitrator shall give reasons for the award. Subject as aforesaid the provisions of the Arbitration Act 1940, or any statutory modification or re enactment thereof and the rules made there under and for time being in force shall apply to the arbitration proceeding under this clause. It is a term of the contract that the party invoking arbitration shall specify the dispute or dispute to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each such dispute. - It is also a term of the contract that if the contractor(s) does/do not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving the intimation from the Authority that the Bill is ready for payment the claim of the contractor(s) will be deemed to have been waived and absolutely barred and the Authority shall be discharged and released of all liabilities under the contract in respect of these claims. The arbitrator(s) may from time to time with consent of the parties extend the time for making and publishing the award."

(5) The disputes and differences arose between the parties and in terms of the arbitration agreement, were referred to respondent No. 2, the sole arbitrator.

(6) On 25th April, 1988, the arbitrator made an award regarding claims referring to the disputes between the parties. By the award dated 24th November, 1988, claim No. 1, part one of the petition was allowed while claim No. 2 was partly allowed and claims Iii Iv V have been disallowed. It is submitted that there is an error apparent on the face of the record pertaining to a part of the Award and to that extent the award is liable to be set aside, the arbitrator has also misconducted himself in the proceedings, and, therfore, a part of the award which is severable, is liable to be set aside.

(7) The learned counsel for the petitioner confined his agreement to claim No. I and the interest. He submitted that the learned arbitrator has gravely misconducted in disallowing claim No. 1 part 2 for Rs. 1,02,326.00 for priming on the steel work. It is submitted by the petitioner that the said works were beyond the scope of the agreement, and the plaintiffs are entitled to their claims. It is submitted that the reasoning of the learned arbitrator is utterly arbitrary and contrary to the material placed before him.

(8) The learned counsel for the respondent submitted that there is no error apparent on the face of the record in the award, and the arbitrator has not misconducted. It is further submitted that it is incorrect and denied that any part of the award is severable and is liable to be set aside on the ground stated by the petitioner. It is submitted by the learned counsel for the respondent that the arbitrator had correctly reached to the conclusion that the priming course done by the plaintiff on the steel was necessary as an integral part of the work itself. Therefore, the plaintiffs were not entitled to any extra amount for executing the same and therefore, a claim of Rs.l,02,326.00 is liable to be rejected. There is no error with regard to part Ii & Iii of claim No. 1 of the award. It is further submitted on behalf of the respondent that a lump sum contract of original items was covered and no separate amount can be claimed for any individual item. It is further mentioned by the respondent that during the construction of the work, the petitioner did not raise any issue relating to the payment for priming and painting of the steel structure erected by them, therfore, the question of denial of payment during construction work never arose. Therefore, it is incorrect to suggest that the award pertaining to claim No. I, part Ii and Iii suffers from errors apparent on the record and consequently the award is liable to be set aside.

(9) The other submissions made by the learned counsel for the petitioner was that the arbitrator has misconducted in not allowing the interest to the plaintiff from the time amount became due until the time the learned arbitrator entered upon reference. And the arbitrator ought to have awarded the interest at the rate claimed by the petitioner.

(10) It may be pertinent to point out that the arbitrator has awarded 10 per cent simple interest per annum from the date of award to the date of payment or decree from the Court whichever is earlier. Therefore, there is no merit in the submission of the learned counsel for the petitioner as far as that award of interest by the arbitrator is concerned.

(11) The learned counsel has pointed out the letter dated 31st December, 1985 sent by the Executive Engineer (Civil) to M/s Metal Pressings, Y-51, Okhla Industrial Area, Phase-11, New Delhi in which it is mentioned that your lump sum encashed tender for the above mentioned work amounting to Rs. 53.40 lakhs for the construction of two hangers has been accepted on behalf of the Chairman, International Airport Authority of India therefore, there is no question of payment of any additional items. Learned counsel for the respondent invited my attention to special conditions of the contract and submitted that according to brief description of items for execution of the work two coats of ready mixed paint over primer of approved quality were included. Clause 5 of brief description of items for execution of work is set out as under: "STRUCTURAL steel work in column & trusses shall include fabrication and erection (i.e. electric welding) to the required slope as well as fixing bearing, purlins, bracing, welded mesh etc. duly painted with two coat of ready mixed paint over primer of approved quality."

(12) Learned counsel further submitted that at initial stages the petitioner only asked for more time to complete the contract and did not make any other complaint. Other documents of record would also shows that he had never made this complaint in the early stages and this is only an after thought and the Court must reject this frivolous claim of the petitioner.

(13) Learned counsel for the respondent apart from trying to satisfy the Court on merit and equity also made a strong legal submission that it is the settled position of law that resonableness of the reasons given by the Arbitrator are not opened to challenge. This position has been settled by a catena of Supreme Court judgments.

(14) In M/s Hindustan Tea Co. Vs M/s K. Shashi Kant & Co. & Anr. their Lordships of the Supreme Court have laid down that the arbitrator is made the final arbiter on the disputes between the parties and the award is not liable to be set aside on the ground that the arbitrator had reached a wrong conclusion or it failed to appreciate the fact.

(15) In M/s Sundasan Trading Co. Vs. The Govt. of Kerala & Anr. their lordships of the Supreme Court have held that reasonableness of the reasons given by the Arbitrator cannot be challenged and even appraisement of evidence by the Arbitrator is never a matter which the Court should question. When parties have selected their own forum, the deciding forum must be conceded the power of appraisement of evidence and the arbitrator is the sole judge of the quality as well as quantity of the evidence and it would be not for the Court to take up for itself the task of being a judge on the evidence before the Arbitrator.

(16) Similarly in Firm Madan Lal Roshan Lal Mahajan Vs Hukum Chand Mills Ltd. Indore. , their Lordships of the Supreme Court have held that award both on facts and law is final and Court cannot review the award and correct any mistakes in its adjudication unless an objection to the legality of the award is an error, apparent on the face of the record.

(17) In Puri Construction Private Limited Vs Union of India the Supreme Court has taken the view that Court cannot sit in an appeal and examine the correctness of the award. 18. In the Constitution Bench Judgment of the Supreme Court in Goa, Daman & Diu Housing Board Vs Ramakant V.P. Darvotkar their Lordships have held that award shows that the arbitrator has considered all specific issues raised by the parties and recorded findings by him after giving reasons. In that event it cannot be said that the arbitrator had misconducted himself. Similarly, in the instant case the arbitrator has given a reasoned award and given cogent reasons for accepting and rejecting each claim. Therefore, in these facts and circumstances, it is not open for any party to urge that the arbitrator has misconducted in any manner.

(19) In Hind Builders vs , their Lordships have held that there are certain clauses of contract on which two views are possible and the arbitrator's acting upon particular interpretation. The interference by the Court by adopting its own interpretation is not permissible in the arbitration proceedings.

(20) In the instant case, the arbitrator has given a reasoned award and he has dealt with each claim and gave cogent reasons for accepting or rejecting the claim. The learned arbitrator has also granted interest to the petitioner. In these circumstances, the award is not open to challenge on the ground that reasoning given by the arbitrator was erroneous or he failed to appreciate the fact in proper perspective.

(21) In these circumstances, the objections filed to the award have to be rejected. The award is made rule of the Court. The Registry is directed to prepare a decree in terms of the award. The petition is dismissed with costs.