Bharat Sanchar Nigam Ltd. And Ors. vs Continental Telepower ...
2002 Latest Caselaw 424 Del

JUDGMENT

J.D. Kapoor, J.

1. Section 34 of the Arbitration and Conciliation Act, 1996 (in short 'Act') has considerably narrowed down the scope and the grounds for setting aside the award. Amongst other grounds like party under some incapacity or invalidity of the agreement or lack of proper notice to the party for appointment of arbitrator or arbitral proceeding, the main grounds for setting aside the award are (i) if it is against public policy or (ii) it deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or (iii) it contains decisions on matters beyond the scope of the submission to arbitration. Section 34 of the Act provides as under:-

"34. Application for setting aside arbitral award:(1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with Sub-section (2) and Sub-section (3).

(2) An arbitral award may be set aside by the court only if-

(a) the party making the application furnishes proof that-

(i) a party was under some incapacity; or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or he arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b).

(i). the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

Explanation- Without prejudice to the generality of Sub-clause (ii),it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81.

2. Other principles governing the acceptance or rejection or remittance are that court should not sit in appeal nor is it supposed to comment upon the findings of facts based upon material and evidence produced before the Arbitrator not is it required to re-appreciate or re-evaluate the evidence nor is ti supposed to find faults with the vies taken by the Arbitrator in respect of interpretation of terms of the contract even if it is erroneous. Until and unless Arbitrator ties himself down to such a legal proposition which on examination is found to be wholly unsound or until and unless the Arbitrator completely ignores the material document which has significant bearing upon the result and fair decision, the court should always refrain from interfering with the award.

3. In the instant case, the main objection is that the learned Arbitrator on the one hand rejected the claim of the respondent of Rs. 1,68,375/- (relating to UP (East) on the ground that the supplies were admittedly made after the opening of the new tender but has allowed the claim of Rs. 34,31,175.33 against Rajasthan Circle on the ground that though the deliveries were made after the opening of the new tender and not relying n the statement that in the said extension letter wherein it was categorically stated that "prices of cables supplied during the extended period should be applicable as per the terms and conditions of DOT if found lower in the communication dated 25.4.97 and holding that the said statement was vague and awarding the said amount. Second objection to the award is that Clause 16 of the tender document which relates to recovery of liquidated damages categorically stated that liquidated charges shall be levied on the total value of the purchase order and since the price was inclusive of excise duty and sales tax, the petitioner rightly deducted and recovered the liquidated damages on the entire value of the cables and this fact has not been appreciated by the learned Arbitrator in the right perspective.

4. As is apparent from the second objection raised by the petitioner it is purely an attack on findings of facts based upon material produced before the Arbitrator and is therefore not tenable. As regards the main objection that the Arbitrator has adopted double standards inasmuch as with regard to UP (East), he rejected the claim of the respondent whereas he allowed the claim wit regard to Rajasthan Circle, perusal of the award shows that the learned Arbitrator had formulated an issue in this regard which reads as under:-

"Whether the prices of the new tender opened on 25.3.1997 can be made applicable to some supplies made by the company much before the price were declared therein?

5. The Arbitrator gave the following findings:-

"In my opinion, rates of one tender cannot be applied for other tender because they may have different terms and conditions w.r.t. specification, payment terms and delivery.

In my view for Rajasthan Circle the question of complying with the new rates does arise and the Department was not justified to apply the new rates and recover Rs. 34,31,175.33 from the claimant. The claimant company also brought to my knowledge Clause 12 of Section III which provides that prices one fixed shall remain valid for a period of delivery. Any increase and decrease in the taxes and other statutory duties will not effect the prices during this period. However, by way of abandoned caution, it has been provided that if there is a decrease in taxes, the benefit will go to the Govt. Therefore, in view of the aforesaid that princes being fixed and deliveries being made much before the issue of the new tender rates, I am of the definite view that there is no justification on the part of the Department to apply new rates for some supplies made before 17.7.97. I, therefore, award a sum of Rs. 34,31,175.33 on this account in favor of the Claimant."

6. Apparently the reasoning of the Arbitrator that in view of Clause 12 of Section III which provides that prices once fixed shall remain valid for a period of delivery and since deliveries were made much before the issue of the new tender rates, there was no justification on the part of the department to apply new rates for supplies made prior to 17.7.1997 is sound and does not suffer from either any infirmity or contradictory approach. This is also purely a finding of fact. It is neither a finding which is against the public policy nor does this finding deal with a dispute not contemplated by or not falling within the terms of the submission to arbitration nor does it contain decisions on matters beyond the scope of the submission to arbitration. The question was one of fact and so was the finding. I do not perceive any reason to allow the petition and dismiss the same.

7. However, as regards the objection that the proper court fee has not been fixed, the same can be taken care of at the time of execution of award.