M/S Babu Ram & Co. vs Delhi Development Authority
2001 Latest Caselaw 1182 Del

ORDER

V.S. Aggarwal, J.

1. Shri L R Gupta was appointed as the sole arbitrator. He pronounced the award dated 31st May, 1993. The award was filed in court and notice had been issued to the parties. Both M/s Babu Ram & Co. (for short the petitioner) and the Delhi Development Authority (the respondent) had preferred objections. In the objections filed by the petitioner it has been alleged that work of providing and laying peripheral sewer line in the area south of Ghaziabad-Nizamuddin Railway line had been awarded to the petitioner. The work was to commence on 25th May, 1986 and to be completed within a period of 12 months. The petitioner had been assured that it was a clear site but o the contrary the site was made available only in piece meal. The work as such was completed and the matter was referred to the arbitrator. Petitioner alleges that arbitrator has gone astray in giving the award and assails the same itemwise, namely where the claim of the petitioner has been turned down. He assails the findings of fact in seriatim pertaining to claim no.2 for Rs. 2,54,276.07 on account of payment withheld of respondent as part rate for extra and substituted items. Claims no.2 withholding Rs. 1,00,000/- from running bills; claim no. 5(i) for Rs. 56,508.85 for cement concrete encasement over joints of pipes and claim 5(ii) for Rs. 8,000/- and 5(iii) for 1,41,752 for GI sheet barricading; claim no. 6 for Rs. 93,170/- and lastly claim no.7 for restoring 600 mm pipe line. According to the petitioner the findings recorded by the arbitrator in this regard are incorrect. It is also asserted that arbitrator was in error in awarding Rs. 1,02,998/- to the respondent.

2. Even the respondent preferred objections against the said award. Firstly stating that the reasons have not been recorded in terms of clause 25 of the agreement. The DDA also assails the findings of the arbitrator on facts with respect to claim nos. 1,2,3, 5(i) and 8. It is again asserted that these findings so arrived at on facts are not sustainable.

3. The short question that comes up for consideration in the present case in view of the facts narrated above, is whether the award is liable to be set aside or not on the reasons stated.

4. The parties arrived at a contract and they agreed to an arbitrator. This arbitration procedure is accepted in all the civilised countries. It is a decision thus of an arbitrator with the consent of the parties irrespective of the fact whether he is a layman, lawyer or any other expert. He is entrusted with a task and being the arbitrator agreed to decide the controversies. Findings so arrived at by the arbitrator thus would be binding and it is not liable to be challenged even if it is erroneous. On facts the findings would be conclusive unless there is an intention to the contrary in the agreement. For all practical purposes he is a domestic tribunal and civil courts would ordinarily not interfere. If there is error in law or apparent on the face of the record or there is any other factual or legal misconduct, the court would interfere.

5. To the same effect is decision of the Supreme Court in the case of Union of India vs. A L Rallia Ram . Similar findings have been recorded by the Supreme Court in the case of The Upper Ganges Valley Electricity Supply Co. Ltd. vs. The UP Electricity Board . In paragraph 10 the Supreme Court summarised the findings in these words:-

It is well settled that if parties constitute an arbitrator as the sole and final judge of the disputes arising between them, they bind themselves as a rule to accept the award as final and conclusive. An award is ordinarily not liable to be set aside on the ground that either on facts or in law, it is erroneous. In Hodgkinson vs. Fernie, (1857) 3 CB (NS) 189 the true principle was stated thus:

"Where a cause or matters in difference are referred to an arbitrator ..... he is constituted the sole and final judge of all questions both of law and fact ..... The only exceptions to that rule are, cases where the award is the result of corruption or fraud and one other, which though it is to be regretted, is now, I think firmly established, viz., where the question of law necessarily arise on the fact of the award, or upon some paper accompanying and forming part of the award."

6. More recently the Apex Court in the decision rendered in the case of B V Radha Krishna vs. Sponge Iron India Ltd. JT 1977 (3) SC 327, held that the High Court ordinarily will not substitute its own decision that of the arbitrator. In other words, the findings were that ordinarily the court would not act as a court of appeal. In paragraph 15 the conclusions from the Supreme Court are:-

Bearing in mind the principles laid down by this Court in the above said cases, if we look into disposal of the matter by the High Court , it would be evident that the High Court has substituted its own view in place of the Arbitrator's view as if it was dealing with an appeal. That is exactly what is forbidden by the decisions of this court. Therefore, we have no hesitation to set aside the judgment of the High Court of this issue.

In other words, ordinarily on findings of fact this court would not set aside an award unless it is shown that the arbitrator has misconducted himself.

7. In the present case in hand both the petitioner as well as respondent assail the award. This is not indicated as to how the arbitrator has misconducted himself. He has given his reasons and therefore it cannot be stated that they are without reasons and therefore it is liable to be set aside. All that is being urged is that a particular finding should not have been arrived at on the facts. For that purpose this court will not sit as a court of appeal over the findings of the arbitrator. This court will not substitute its own decision. They were given the hearing and a chance to produce whatever evidence they intend to. Once findings have been so recorded the same on facts would not be interfered with. Consequently. it must be held that objections without any further probing are liable to fail.

8. For these reasons the objections are dismissed and the award is made rule of the court. A decree in terms of award is passed. Interest would be awarded at the rate of Rs. 12% from the date of the judgment on the principal amount till final payment.