Ism Airport Techniques vs Airport Authority Of India
2005 Latest Caselaw 1464 Del

JUDGMENT

Sanjay Kishan Kaul, J.

Page 1897

1. An agreement was entered into on 27.03.1989 whereby the petitioner was awarded the contract for extension of Cargo Handling System at the Cargo Complex, IGI Airport, New Delhi. Disputes arose between the parties and in terms of clause No. 4.23 being the arbitration clause of the agreement between the parties, the Member Engineering of the respondent appointed their nominee Arbitrator. The petitioner also appointed its Arbitrator.

2. A unanimous Award was made by the Arbitrators on 10.09.1992. A corrigendum to the Award was issued on 08.12.1992 in terms whereof the payment for certain claims was to be made in Deutche Mark (DM) and some part in Rupees.

3. A perusal of the Award shows that the same is based on the appreciation of evidence.

4. Learned counsel for the respondent states that all the claims relate to deductions made by the respondent on various accounts and it is the submission of the respondent that these deductions were rightly made. The Arbitrators, however, found that in respect of the large number of claims, the deductions were not correctly made and have awarded either the claimed amount or reduced amount depending on the material before the learned Arbitrators. Some of the claims were rejected.

5. It is trite to say that this Court while considering objections under Sections 30 and 33 of the Arbitration Act, 1940 (hereinafter to be referred to as, 'the said Act') does not sit in appeal over the decision of an Arbitrator. The objections are not akin to appeal from an original decree. Thus, unless it is shown that there is a legal misconduct of the Arbitrator or otherwise, the Award is made in ignorance of law, or no adequate opportunity of hearing has been granted in violation of the principles of natural justice, there would be no occasion to set aside an Award.

6. Learned senior counsel for the petitioner has drawn the attention of this Court to judgment of the Apex Court in Gujarat Water Supply & Sewerage Board v. Unique Erectors (Gujarat) (P) Ltd. and Anr., . In para 11, it was observed as under :-

"11. .. Reasonableness as such of an award unless the award is per se preposterous or absurd is not a matter for the court to consider. Appraisement of evidence by the arbitrator is ordinarily not a matter for the court. It is difficult to give an exact definition of the word 'reasonable'. Reason varies in its conclusions according to the idiosyncrasy of the individual and the times and the circumstances in which he thinks. The word 'reasonable' has in law prima facie meaning Page 1898 of reasonable in regard to those circumstances of which the actor, called upon to act reasonably, knows or ought to know."

7. Learned senior counsel also referred to judgment of the Apex Court in Food Corporation of India v. Joginderpal Mohinderpal and Anr., where it was observed that 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. Thus, only in case of an error apparent on the face of the Award, can the Award be set aside if in the Award there is any proposition of law which is erroneous. Error of law as such is not to be presumed. In case of a reasoned Award, unless it is demonstrated to the Court that such reasons are erroneous as per position of law or that the Arbitrator has taken a view which could not be possibly be sustained in any view of the matter, the challenge to the Award of the Arbitrator cannot be sustained. Thus, if an Arbitrator has taken a plausible view, there is nothing for the Court to examine and it is not for the Court to examine the merits of the Award with reference to the materials produced before the Arbitrator. Thus, a court cannot sit in appeal over the view of an Arbitrator by re-examining and re-assessing the materials.

8. The Apex Court considered the philosophy of settlement of disputes by arbitration and observed in para 7 as under :-

"7. When power came to the East India Company, they framed Regulations in exercise of the power vested in them by the British Government. Some of these Regulations were touching arbitration. Bachawat gives description of the evolution of the Arbitration Act, 1940. Therefore, arbitration as a mode for settlement of disputes between the parties, has a tradition in India. It has a social purpose to fulfilll today. It has a great urgency today when there has been an explosion of litigations in the courts of law established by the sovereign power. New rights created, or awareness of these rights, the erosion of faith in the intrinsic sense of fairness of men, intolerant and uncompromising attitudes are all the factors which block our courts. The courts are full of litigations, which are pending for long time. Therefore, it should be the endeavor of those who are interested in the administration of justice to help settlement by arbitration, if possible. It has also a social efficacy being the decision by the consent of the parties. It has greater scope of acceptance today when there is a certain erosion of faith in view of the failure to appreciate the functions of the courts of law. It has also the advantage of not only quickness of decision but of simplicity of procedure. But in proceedings of arbitration there must be adherence to justice, equity, law and fair play in actions. However, the proceedings of arbitration must adhere to the principles of natural justice and must be in consonance with such practice and procedure which will lead to a proper resolution of the dispute and create confidence of the people for whose benefit these processes are resorted to. It is, therefore, the function of Page 1899 courts of law to oversee that the arbitrators act within the norms of justice. Once they do so and the award is clear, just and fair, the courts should, as far as possible, give effect to the award of the parties and make the parties compel to adhere to and obey the decision of their chosen adjudicator. It is in this perspective that one should view the scope and limit of correction by the court of an award made by the arbitrator. We should make the law of arbitration simple, but must be responsive to the canone of justice and fair play and make the arbitrator adhere to such process and norms which will create confidence, not only by doing justice between the parties, but by creating a sense that justice appears to have been done. Sections 30 and 33 of the Act provide for the grounds on which an award of the arbitrator can be set aside. These were mainly, until recent changes made by statutory laws in England, in consonance with the English principles of Common Law as adopted in India. So far as the material of the present purpose is concerned, an award of the arbitrator can only be interfered with or set aside or modified within the four corners of the procedure provided by the Act. It is necessary to find whether the arbitrator has misconducted himself or the proceedings legally in the sense whether the arbitrator has gone contrary to the terms of reference between the parties or whether the arbitrator has committed any error of law apparent on the face of the award. It is necessary to emphasise that these are grounds for setting aside the award but these are separate and distinct grounds. Halsbury's Laws of England, Vol. 2 4th edn., para 623 reiterates that an arbitrator's award may be set aside for error of law appearing on the face of it. Though this jurisdiction is not to be lightly exercised. The award can also be set aside if, inter alia, the arbitrator has misconducted himself or the proceedings. It is difficult to give an exhaustive definition what may amount to a misconduct on the part of the arbitrator. This is discussed in Halsbury's Laws of England (supra). It is not misconduct on the part of an arbitrator to come to an erroneous decision, whether his error is one of fact of law, and whether or not his findings of fact are supported by evidence. See the observations of Russel on Arbitration, 20th edn., page 422."

9. It is within the ambit of the aforesaid principles that the matter has to be examined. Since the contention of the counsel for the respondent itself is that to consider the objections, there has to be reappraisal of evidence to come to the conclusion that the Arbitrators ought not to have come to the conclusion that the deductions were wrongly made, the very scope of the objections are outside the purview of what can be considered in such proceedings.

10. In view of the aforesaid position, I do not consider it necessary to deal with the various objections filed by the respondent item-wise. Since they call for reappraisal of evidence as submitted by learned counsel for the respondent.

11. There is one aspect of the matter which needs to be considered and that relates to the award of interest since it is the submission of learned counsel for the respondent that the award of interest @ 15% p.a. is on the higher side and especially when part of the Award is made in foreign currency of Deutche Mark.

Page 1900

12. Learned senior counsel for the petitioner fairly states that the amount of interest may be reduced to 12% p.a. in respect of the Award made in Indian Rupees and to 7% p.a. in respect of the Award made in Deutche Mark. This is especially so since the International Lending Rates (LIBOR) are around this percentage.

13. I consider the aforesaid a fair submission. In so far as the LIBOR are concerned, in the recent decision in CS (OS) No. 965A/2002 & IA No. 6380/2002 titled Albamer & Co Ltd. v. Minerals and Metals Trading Corporation Ltd. decided on 25.10.2005, the award of 7% p.a. interest by the Arbitrator based on LIBOR has been upheld.

14. In view of the aforesaid, the Award is liable to be modified only to the extent that the petitioner will be entitled to interest @ 12% p.a. on the award made in Indian Rupees and at 7% p.a. on the award made in Deutche Mark. The application stands disposed of.

CS (OS) No. 52/1993

1. The objection petition has been disposed of and, thus, the Award dated 10.09.1992 modified by the Corrigendum dated 08.12.1992 is made Rule of the Court with the modification that the petitioner shall be entitled to interest @ 12% p.a. on the award made in Indian Rupees and at 7% p.a. on the award made in Deutche Mark till date of realisation.

2. Parties are left to bear their own costs.

3. Decree-sheet be drawn up accordingly.