National Steel Rolling Mills vs Delhi Development Authority
2001 Latest Caselaw 1272 Del

ORDER

V.S. Aggarwal, J.

1. This is a suit filed by National Steel Rolling Mills, hereinafter described as petitioner, under Section 14, 17 and 29 read with Section 20 of the Arbitration Act, 1940. It seeks that the award of Shri G R Hingorani should be filed and decree in terms of the same should be passed.

2. In pursuance of the notice that had been issued the Delhi Development Authority has filed the objections to the award of the arbitrator referred to above. It has been alleged that the arbitrator has ignored the material evidence on the record. Under clause 14 of the agreement between the parties and also under the terms of reference the arbitrator was required to record its reasons for awarding or rejecting any of the claims. In the present case the arbitrator has filed to record any reasons for awarding or rejecting the claim. Further objection has been raised that the award of the arbitrator with respect to claim no.1 whereby a sum of Rs.5,06,760/- was allowed is erroneous. The arbitrator failed to appreciate that as per paragraph 7 of the award it was agreed between the parties by letter dated 17th January, 1983. It was made clear and it was agreed between the parties that, if necessary, material shall be got tested from any approved test house at the cost of the petitioner. The arbitrator ignored the provisions of special condition no.4 of the contract which empowers the Delhi Development Authority to get the material tested from any approved test house at the cost of the petitioner. The Delhi Development Authority had got the material tested and had incurred a sum of Rs. 10,211/- on account of testing charges. The arbitrator acted contrary to the terms in rejecting the recovery of Rs.10,211/-. It has further been asserted that he committed a material illegality in awarding refund of Rs.1 lakh as the same was lawfully and validly forfeited because the petitioner had failed to complete the supplies for 4,140 metric tonnes within the stipulated period. The delay was attributed to the petitioner and therefore the action so taken was justified. Furthermore, it is alleged that the arbitrator failed to appreciate that amount of Rs.3.64,993/- and Rs. 31,556/- on account of supply of material and cartage was liable to be adjusted against the liquidated damages. In this process the contentions raised was that the arbitrator has gone astray and has come to a wrong finding.

3. Needless to state that the objections as such have been contested. It is alleged that the arbitrator has passed a speaking and valid award and the amounts that have been allowed were due to the applicant/petitioner.

4. Parties had led their evidence by way of affidavits. On 21st November, 1988 this court framed the following issues:-

1. Whether the Award is liable to be set aside for the reasons stated in the objection petition?

5. The first and foremost plea so raised has been that the arbitrator has not given a reasoned award and reasons are required to be given, in fact are missing. On that count the contention of the learned counsel must be taken to be devoid of any merit. Perusal of the award which is being impugned shows that reasons have been given and what is required is that reasons should be recorded by the arbitrator. It is not necessary that the same should be in the form of a lengthy judgment. Reference in this connection can well be made to the decision of the Supreme Court in the case of Indian Oil Corporation Ltd. vs. Indian Carbon Ltd. . A similar question had come up for consideration before the Supreme Court. It was held that it is not obligatory to give detailed judgment. The precise finding can be reproduced from paragraph 8 and are:

"... It is one thing to say that reasons should be stated and another thing to state that a detailed judgment be given in support of an award. Even if it be held that it is obligatory to state the reasons, it is not obligatory to give a detailed judgment....."

6. Identical is the position in the present case. The arbitrator has given the reason in support of his findings. Therefore, the very basis of the said argument must fail.

7. Confronted with that position it was alleged that as per the agreement there can be testing of the material and Rs.10,211/- could not have been dis-allowed by the arbitrator. In the same breadth it was further argued that refund of the security amount of Rs.1 lakhs is not proper or valid. In the first instance even if we go to the facts it is obvious that when no voucher in this regard was produced with respect to the alleged testing the arbitrator was justified in dis-allowing the amount of Rs.10,211/-. As regards the refund of the security, once there was no default so shown necessarily the security amount had to be refunded.

8. There is another way of looking at the matter. On these facts the arbitrator who has been appointed by the parties has to give his own conclusion, the court will not scrutinise the evidence and even if pleas ... that another finding should have been arrived at would set aside award. The Supreme Court in the case of M/s Hindustan Tea Co. vs. M/s K. Sashikant & Co. while considering a similar question repelled the argument and held:-

"3. The Award is reasoned one. The objections which have been raised against the Award are such that they cannot indeed be taken into consideration within the limited ambit of challenge admissible under the scheme of the Arbitration Act. Under the law, the Arbitrator is made the final arbiter of the dispute between the parties. The Award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts....."

9. Similarly in the case of State of Rajasthan vs. Puri Construction Co. Ltd. , the Supreme Court held that an award cannot be set aside merely on the ground that the arbitrator is alleged to have misread or not appreciated the evidence properly. More recently in the case of Arosan Enterprises Ltd. vs. Union of India & Anr. a similar question had been considered. The Supreme Court held reiterating the earlier view that the court is not to substitute its own evaluation. Paragraph 37 provides the guide-lines and the relevant portion reads:-

"37. The common phraseology "error apparent on the fact of the record" does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record. The court as a matter of fact, cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of the arbitrator is a possible view the award or the reasoning contained therein cannot be examined....."

10. Conclusions are obvious that this court will not set aside an award merely it is alleged that the findings of fact so arrived at are not to the satisfaction of the concerned person or the court. It has already been noted above that otherwise also the findings so arrived at are based on evidence and are meritorious. Consequently in the absence of any other plea having been raised the objections must fail.

11. For these reasons the ward is made rule of the court and decree in terms of the award is passed.