Jumbo International vs Tribal Cooperative Marketing ...
2001 Latest Caselaw 1422 Del

JUDGMENT

V.S. Aggarwal, J.

1. The present petition has been filed by M/s Jumbo International, hereinafter described as petitioner under Section 14 and 17 of the Arbitration Act, 1940 for filing of the award and for making the award a rule of the Court. It had been asserted that in terms of the agreement between parties the matter was referred to the arbitration in pursuance of the order of this court dated 3th April, 1994. Mr. K.L. Kakkar was appointed as the sole arbitrator and that he has since submitted his award.

2. In pursuance of the notice having been issued the respondent M/s Tribal Cooperative Marketing Development Federation of India filed objections under Section 30 of the Arbitration Act read with Section 85 of the Arbitration and Conciliation Act, 1996.

3. it has been asserted that the applicant had laid a claim of Rs. 7,50,000/- while the objector had field the counter claim claiming Rs. 73,165/- with interest. The arbitrator had made the award. The same is stated to be invalid and that the same is liable to be set aside. The reasons given by the applicant are that no specific reasons have been given as to why the claim of the applicant is being allowed. he has taken documents into consideration which were not relevant and has failed to see that petitioner's evidence with respect to the expenditure of labour overheads stood unsubstantiated. The petitioner even had failed to prove the wage liability to be due from the objector on account of the alleged idling of the processing plant. The petitioner was unable to name the labour contractor or prove documentary evidence in this regard. The arbitrator had not given any reason for rejecting the applicants claim for defective/imperfect specification supplied to him. He failed to appreciate that even under the agreement the parties never intended the processing to go on continuously on day to day basis. The processing was understood to be undertaking as and when the raw-material were supplied. AS such in the absence of any actual day to day processing of raw material the petitioner was not entitled to claim Rs. 12,90,000/- on account of delay, loss as alleged.

4. It is further the claim of the objector that the arbitrator failed to deal with the objectors claim for damages. In this process there is an error apparent on the face of the record.

5. In the reply filed the petitioner had contested the objections. It has been asserted that arbitrator is a domestic tribunal appointed by the parties. his decision whether right or wrong is binding on the parties. Even an erroneous decision so arrived at is not liable to be set aside.

6. It is further denied that the award of the arbitrator is liable to be set aside on the ground asserted by the objector. It is not disputed that the arbitrator vide his impugned award had partly allowed the claim of the applicant to the extent totalling Rs. 2,35,000/- and in all it has been allowed for Rs. 12,90,000/- being the loss calculated of Rs. 15,000/- per day on account of non-supply of raw material with interest. However, it is denied that the arbitrator has misconducted himself or that for no valid reasons had not allowed the counter claim of the objector respondent.

7. On 2nd February, 1997 following issues were framed:

1. Whether the impugned award is liable to be set aside for the reasons stated in the objections.

2. Relief.

8. Issue No. 1: As is apparent from the language of the issue framed the only question that requires a consideration is as to if the award is liable to be set aside on the grounds alleged by the respondent.

9. There is little controversy that is being raised with respect to the principle of law as to under what circumstances an award can be set aside. Indeed the arbitrator is a domestic tribunal appointed to decide the controversy between the parties. His decision whether right or wrong is binding unless he misconducted himself. Even if it is erroneous decision it would not be vitiated the exception being that there is error apparent on the face of the record. On both points of law and fact the award of the arbitrator is final. This court will not ordinarily sit as a court of appeal and speculate as to what might to be the reasons that the court could arrive at. Therefore, the court would restrict itself in its attempt to probe the mental process by which the arbitrator has reached his conclusion nor it will re-appreciate the evidence and give a fresh findings unless as referred to above, he has misconducted himself or there is an error apparent on the face of the record.

10. The decision of the Calcutta High court in the case of Union of India v. D. Bose and Ors. AIR 1931 Calcutta 95 also provides the answer to this often disputed controversy. The court held that if the findings are based on evidence, this court ordinarily would restrict itself and it will not be an error apparent on the face of the record even if another view was possible. It was held:

"......The error in law on the face of the award means that one can find in the award or a document actually incorporated thereto as for instance a note appended by the Arbitrator stating the reasons for his judgment some legal proposition which is the basis of the award and which is erroneous. The error in law must be apparent on the face of the award or some of the documents which form part of the award itself. Documents not connected or incorporated directly into the award cannot be looked into for that purpose. Thus where there is no error apparent on the face of the award it is not open to a Court to go into the proceedings of the Arbitrator....."

11. More recently the Supreme Court in the case of Arosan Enterprises ltd. v. Union of India and Anr. has again reiterated the same view as ordinarily the court would restrict itself in the award which is base don evidence and that will not re-appraise the evidence. The precise findings are reproduced below for the sake of facility.

"36. Be it noted that by reason of a long catena of cases, it is now a well-settled principle of law that reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the court to reappraise the evidence is unknown to proceedings under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the court unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. In the event however two views are possible on a question of law as well, the court would not be justified in interfering with the award.

The common phraseology "error apparent on the face 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."

12. It is in this backdrop and the settled principle of law that one can revert back to the facts of the case. As referred to above, the main grievance of the objector is that certain amount of evidence that has been considered should have been read otherwise to reject the claim of the applicant. It has been asserted that the applicant had failed to prove the labour contract or to show that the damages had ben suffered. He is further claiming that arbitrator failed to consider that under the agreement parties never intended the processing to go on continuously on day to day basis. All these controversies are of facts. The arbitrator had gone into the same and recorded his award. That being the position, it cannot be taken that there is error apparent on the face of the record or that the arbitrator has miscondcuted himself. The contention therefore in this regard so raised must be repelled.

13. The only other plea offered has been that the arbitrator has not recorded the reasons and therefore the award is liable to be set aside.

14. In this regard perusal of the award itself reveals that the arbitrator is totally unreasoned. it is not required that reasons should be in the form of a judgment of the court.

15. The attention of the court has further been drawn to the decision of Raipur Development Authority and Ors. v. Chockamal Contractors and Ors. , the Supreme Court held that award passed under the Arbitration Act is not liable to be remitted or set aside merely on the ground that no reasons have been given. Such a requirement operating in public law sphere cannot be imported into the field of private law such as the law of arbitration. It was, as noted above, in fact the arbitrator has recorded his brief reasons. The reason of the arbitrator need not be a regular judgment of a court. The result therefore would be that this particular plea must also fail.

16. Accordingly, the issue is decided against the objector.

17. Relief: For these reasons given above award is filed and is made rule of the court. A decree in terms of the award is passed. The applicant would be entitled to interest at the rate of 12% p.a. from the date of the filing of the petition till the amount is paid.