Govt. Of Nct Of Delhi vs Shri Khem Chand And Anr.
2003 Latest Caselaw 464 Del

JUDGMENT

B.N. Chaturvedi, J.

1. Respondent-claimant was awarded the work of extension of Ranhola Bridge at RD-30825 M Supplementary Drain in Delhi by the objector-petitioner. The designs and drawing for the bridge were supplied to the respondent-claimant by the petitioner-objector. The claimant completed the work in September, 1993 according to the designs and drawings so supplied by the petitioner-objector. Thereafter, the bridge was opened to traffic. Soon after its completion, the bridge structure showed signs of distress leading to collapse of one of its end spans. Middle span also showed signs of distress. The failure of the structure, according to the petitioner-objector, was attributable to poor workmanship and use of substandard material by the claimant. The claimant, on the other hand, maintained that the structure had failed on account of inadequate and defective designs and drawings supplied by the petitioner-objector.

2. On matter being referred to sole arbitration of one Shri G.G. Shivdasani, a retired Chief Engineer of the petitioner-objector and on his entering upon reference, the parties filed their claims and counter-claims before him. The Arbitrator, eventually, made and published his award dated 19.2.1999. The petitioner-objector filed its objections against the award on 27th of May, 1999 questioning the award allowing the claims of the respondent-claimant on the counts indicated therein and disallowing its counter-claims, mainly on the ground that the Arbitrator had a biased approach and made the award ignoring the evidence placed on record, thereby misconducting himself and the proceedings. Accordingly, the petitioner seeks the award dated 19.2.1999 to be set aside with costs throughout.

3. The respondent-claimant, on the other hand, in his reply to the said objections pleaded that the pleas raised by petitioner-objector assailing the award are devoid of any substance and are, therefore, liable to be dismissed. It was also added that the objections raised by the petitioner-objector are beyond the scope of Section 34 of the Arbitration and Conciliation Act, 1996 and are, therefore, liable to be disallowed on this ground as well.

4. I have heard the learned Counsels for the parties. I have also perused the award and the arbitration proceedings.

5. The claimant made following claims before the Arbitrator :

Claim

:   

Rs. 1.525 lakhs on account of  balance amount due      towards work executed but not paid.

Claim

:   

Rs. 3.55 lakhs on account of payment due under clause     

cc of the contract toward rise, weightage or labour      and price of material as well as POL.

Claim

:   

Rs. 1 lakh on account of security deposit. : 

Claim

Rs.

2 lakhs on account of damages. :

Claim

:   

Interest @ 18% per annum on the amount of claims      from the date the same were payable till date of decree      or payment whichever is earlier.

Claim

:   

Rs. 20,000 costs of proceedings.

 Claim

:   

Rs. 75,000 on account of excavation of Toe Wall and      allied operations.

6. While resisting the claims on the aforesaid counts, the petitioner-objector raised certain counter-claims These are :

Counter-claim

:

Rs.

7.5 lakhs for rehabilitation of defective portion of the bridge.

Counter-claim

:

Rs.

1,01,739/- as compensation for delay in execution of the work.

Counter-claim

:

Rs.

5 lakhs on account of damages.

Counter-claim

:

Rs. 20,000/- on account of  local and other miscellaneous expenses.

7. The Arbitrator disallowed claim No. 1 as such the details of items and the measurement of the work done had not been produced by the claimant. However, a sum of Rs. 9,343/- was awarded on account of substituted item under claim No. 1 as the petitioner-objector found to have admitted its liability in that respect. Under claim No. 2 as against claim of Rs. 3.55 lakhs, a sum of Rs. 2,10,525/- only was awarded in view of the claimant reducing his claim to that extent in the course of proceedings. Further, security deposit of Rs. 1 lakh was directed to be released to the claimant under claim No. 3. Claim Nos. 4, 6 and 7 were disallowed while under claim No. 5, instead of awarding interest @ 18% per annum, as sought by the claimant, it was allowed @ 15% per annum only.

8. On the counter-claims raised by the petitioner-objector, the Arbitrator refrained from making his award in relation to counter-claim No. 2 pertaining to levy of compensation for delay in execution of the work in view of Clause 2 of the agreement, by virtue of which it was the Superintending Engineer alone who could levy the same and his decision in that respect was to be final. Both the parties agreed before the Arbitrator that the counter-claim in that respect was outside the jurisdiction of the Arbitrator.

9. As far as counter-claims on the remaining counts were concerned, the same were declined.

10. A Court should approach an award to support it, if that is reasonable, possible rather than to destroy it, by calling it illegal (See "Santa Sila v. Dhirendranath", ). The law in this regard as it existed prior to enactment of the Arbitration and Conciliation Act, 1996 continues to hold the file.

11. The jurisdiction of the Court when called upon to decide the objection raised by a party against an arbitral award, is limited, as expressly indicated in the Arbitration and Conciliation Act, 1996 (for short 'the Act'). The Court has no jurisdiction to sit in appeal and examine the correctness of the award on merits with reference to the materials produced before the Arbitrator. It cannot sit in appeal over the views of the Arbitrator by re-examining and re-assessing the materials. (See "Puri Constructions (P) Limited v. Union of India", ).

12. Russel says:

"It is not misconduct on the part of an Arbitrator to come to an erroneous decision, whether his error is one of fact or law, and whether or not his findings of fact are supported by evidence. It may, however, be misconduct if there are gross errors in failing to hear or improperly receiving evidence." (Russel on Arbitration, 19th (1979) Ed. p 475)

13. In the case on hand, the Arbitrator noticed that the work was executed under the supervision of the engineers of the petitioner-objector. Further, the work as executed was accepted and payment in respect thereto was made without any reservation. On the basis of evidence produced before him, he concluded that the failure of structure was rather attributable to deficiency in designs and drawings. Spot inspection also, according to the Arbitrator, led to the same finding.

14. It is noticed that against claim No. 1, which was to the tune of Rs. 1,25 lac, Rs. 9.343/- that was awarded under this head was rather on account of an admitted liability for a substituted item. Surprisingly, the petitioner-objector has raised objection against award of Rs. 1.25 under claim No. 1, when no such amount has actually been awarded. The objection against the award in this respect is thus clearly unfounded and misconceived.

15. It was contended on behalf of the petitioner-objector that the Arbitrator acted in a biased manner by ignoring its evidence placed on record and thereby misconducted himself and the proceedings. The ground that the Arbitrator misconducted himself or the proceedings is not available in the present Act in that form. Of course, specific acts of misconduct attributable to the Arbitrator, for instance, in violation of Section 18 in Part I mandating that each party shall be given full opportunity to present its case, will furnish a ground for setting aside of the arbitral award under Clause (a)(v) of Section 34(2) of the Act. Likewise, the act of the Arbitrator of taking the evidence of one party behind the back of the other party being in violation of Section 18 in Part I, which requires that both the parties shall be treated with equality and his act of improperly proceeding ex parte against any party, could account for setting aside an award. Further, the act of the Arbitrator in accepting undue hospitality from one party or actually taking bribe from that party, what fell under the expression "mis conducted himself", now fall within the purview of Explanation to Clause (b) of Section 34(2) of the Act, as showing that the award was induced or affected by corruption and could thus be a ground to set aside the award under Clause (b)(ii) of Section 34(2). The petitioner-objector's plea that the Arbitrator, in the instant case, ignored the evidence placed by it before him, fails to bring out a case of misconduct on the part of the Arbitrator, as envisaged under the Act.

16. In terms of Sub-section (4) of Section 19 of the Act, it is the Arbitral Tribunal which has to decide the questions of admissibility, relevance, materiability and weight of any evidence. The Arbitral Tribunal is not required to follow technical rules of evidence in terms of Evidence Act, as applicable to the Courts of Law. No doubt this is subject to the provisions of Part I of the Act, and especially the provisions of Section 18 that principles of natural justice must be followed, and any restriction imposed by an agreement between the parties as to the procedure to be followed by the Arbitral Tribunal. In the present context, there is neither any allegation of non-adherence to the principles of natural justice nor that the Arbitrator acted contrary to any agreement between the parties as to the procedure to be followed by him. In the circumstances, the award in question cannot be set aside simply on the ground that the Arbitrator according to the petitioner-objector excluded certain evidence placed before him by it.

17. It was next pleaded on behalf of the petitioner-objector that the Arbitrator had a biased approach in favor of the respondent-claimant. Perusal of arbitration proceedings, material on record and the award, however, do not appear to provide any indication in this regard. Alleged exclusion of petitioner-objector's material placed before the Arbitrator from consideration or disallowing its counter-claims cannot lead to infer a partisan stance on the part of the Arbitrator.

18. As a matter of fact, the text and tenor of the objections raised against the award in question appear more akin to those contemplated under Sections 30 and 33 of the Arbitration Act than the ones under the new Act. The scope of Section 34 of the Act, which provides for setting aside of award is far less than under Sections 30 and 33 of the old Act [See Olympus Superstructures Pvt. Limited v. Meena Vijay Khetan and Ors., ]. Leaving aside the grounds arising under Sections 13(5) and 16(6), which are de hors Section 34, the grounds for setting aside an arbitral award stated in Section 34 are exhaustive and the Court can set aside an arbitral award only if one of the grounds mentioned therein is found. Objections raised against the award, in the present case, fall short of making out any of the grounds stated in Section 34.

19. Finding no substance, the objection petition is dismissed.

20. No costs.