Gravs Consulting Engineers & ... vs Union Of India
1997 Latest Caselaw 492 Del

ORDER

Anil Dev Singh, J:

1. The parties entered into a contract whereby the petitioner was required to supply stores to the respondent. The agreement contained an arbitration clause. Disputes arose between the parties which were referred to arbitration of the Additional Legal Adviser, Government of India, Ministry of Law and Justice. The arbitrator by his award dated May 23, 1991 allowed first two claims of the petitioner and rejected the remaining claims No. 3 and 4. The arbitrator also rejected the counter-claims of the respondent. Under claim No.1, which was a claim for DM 27874 towards nonpayment of price in respect of stores stated to have been supplied by foreign principals of the petitioner, the arbitrator allowed the claim for the reasons mentioned against counter-claim No.1 of the respondent-Union of India. In so far as claim No.2 was concerned, which was for a sum of Rs.10,941.83 for non-payment of Indian agent's commission to the petitioner by respondent in respect of the stores supplied by its principals, the arbitrator allowed the claim, again for the reasons mentioned in counterclaim No.1. In respect of counter-claim No.1, which was the claim of the Union of India for a sum of DM 27874 and Rs.10,941.83 on account of liquidated damages which the respondent had levied for the delayed supply of the ordered stores, the arbitrator while disallowing the same recorded the following reasons :-

"i) The respondents could not prove any loss alleged to have been suffered by them due to delayed supply of the stores. Besides, I hold that the ordered stores have been supplied by the foreign principals of the claimants from ermany within reasonable time particularly when the Letter of Credit opened by the respondents became operative on 28.3.84 and the stores were supplied by the foreign principals of the claimants on 27.4.84 and as per terms of the contract it was obligatory on the respondents to open the Letter of Credit first before making the supply of the ordered stores by the claimant's principals.

ii) The stores supplied by the foreign principals of the claimants have been accepted by the consignee without giving a notice as required under section 55 of the Indian Contract Act, 1872, particularly when the R/R and Denial Clauses which were incorporated in the Amendment Letter dated 10.2.84 were operative upto 30.3.84 upto which date the delivery period was extended, the stores having been received by the consignee on 27.4.84.

iii) The imposition of liquidated damages @ 5% as provided in the contract without proving the actual loss suffered by them because of the delayed supply of the ordered stores is in the nature of penalty which cannot be legally sustainable."

2. It is well settled that the reasonableness of the reasons given by the arbitrator cannot be a matter for consideration in objections filed by the party who suffers the award. The arbitrator is the final arbiter of disputes between the parties and the court while examining the award for the purpose of sections 17, 30 and 33 of the Arbitration Act, 1940, does not sit as a court of appeal. The court cannot also reappraise the material on record for coming to a conclusion different than the one arrived at by the arbitrator.

3. Having regard to above discussion, the objections under sections 30 and 33 of the Arbitration Act filed in Suit No. 2559/91 are dismissed. The award is made a rule of the court and a decree in terms thereof is hereby passed. The award will form part of the decree.

4. In case the respondent does not make the payment of the decretal amount within a period of eight weeks, the petitioner will be entitled to interest at the rate of 14% per annum from the date of decree till realisation.