Delhi High Court
Voltas Limited vs Union Of India (Uoi) on 12 February, 2007
Author: S K Kaul
Bench: S K Kaul
JUDGMENT
Sanjay Kishan Kaul, J.
IA 1895/00 (Under Sections 30 and 33 of Indian Arbitration Act, 1940) in CS(OS) 2383-A/99
1. The dispute between the parties is now more than 30 years old arising from a contract for supply entered into by the petitioner with the respondent, Union of India. Supplies were undisputedly made and the dispute relates to the balance amount claimed by the petitioner.
2. The agreement contained a standard arbitration clause and thus the dispute was referred to an Arbitrator appointed by the Union of India. The earlier arbitration proceedings resulted in a judgment setting aside the Award and the matter being remanded back for arbitration. In view thereof, in terms of the letter dated 19.2.1999, Smt.Shail Goel, Additional Legal Advisor to the Government of India, Ministry of Law and Justice and Company Affairs, New Delhi was appointed as a new Arbitrator, who has made made and published her Award dated 2.7.1999. The respondent has once again filed objections to the Award.
3. The dispute is limited since there is only one principal claim apart from the claim for interest. The claim arises from clause 19(b) of the contract, which reads as under:
b) Prices ? Prices are firm and exclusive of Sales Tax and Excise Duty and for import of tubings the prices are subject to statutory variation of Exchange Rate and Custom Duty. The present prices are based on the current rate of Exchange as under:
RATE OF EXCHANGE: JAPANESE YEN 3225 = Rs. 100/-
US DOLLARS 11 = Rs. 100/-
Custom Duty 75% C.I.F. Price for item (i) Rs. 1383/- per piece
(ii) Rs. 984/- per piece?
4. It is really not even in dispute that the tubings price was variable on account of variation of exchange rate and customs duty. The customs duty rates came down with the result that the obligation on the respondent to pay the amount got reduced. It is the claim of the petitioner that there was an upward revision in the rate of Yen, which resulted in marginal increase in the basic price and thus undisputedly a lesser amount has to be paid to the petitioner. The dispute is in relation to the extent of reduction.
5. Both the parties filed their respective calculations before the Arbitrator. As per the calculations filed by the petitioner, the difference arising from the marginal upward revision in actual cost of import was accounted for along with the reduction in the amount on account of reduction of actual customs duty from 75% to 45%. It may be noticed that the said Annexure-I giving the calculations states the actual customs duty paid. On the other hand, the respondent has made calculations on the basis of a different CIF value calculated on a unit price indicated for import license purposes.
6. In respect of the aforesaid controversy, learned Counsel for the petitioner has drawn the attention of this Court to the offer made by the petitioner dated 6.3.1976 which in the clause for prices quoted the CIF value required for import lincence purposes in view of the tubings. The exchange rate and customs duty clause, which has been referred to, aforesaid, finds mention in the proposal thereafter. The advance acceptance of tender was communicated by the respondent vide letter dated 31.12.1976 specifying the total price as Rs. 42,23,310/-. While mentioning the price, the said letter sought to draw the attention of the petitioner to the prices clause, which was quoted again as also the clause for specific condition, which referred to the import recommendation certificate for Rs. 14,64,036/- being issued separately. It is this amount, which has been taken as the basis for calculation by the respondent.
7. The Arbitrator has considered both the calculations and found merit in the calculation of the petitioner.
8. Learned Counsel for the respondent seeks to contend that the contract is devoid of reasons. I am unable to accept this plea. The reasons in an Award are not like that of a judgment given by the Court. As long as it is possible to decipher the thought process of the Arbitrator, nothing more is required. The Arbitrator has considered both the calculations and on the basis of the clauses of the contract, interpreted the same and in my considered view, rightly so.
9. It is pertinent to note that this Court does not sit as Appellate Court to interfere in an Award merely on the basis that the Court may reach a different conclusion on the material available before the Arbitrator. It is only in the eventuality of an Award being perverse that such interference is called for as in the absence of an Award being absurd, reasonableness is not a matter to be considered by the Court. In this behalf, reference may be made to the judgment of the Apex Court in Food Corporation of India v. Joginderpal Mohinderpal and Anr. . In appreciating an Award made by reference to clauses of contract, all that is to be seen is something that is not provided at all in the contract, is not awarded by the Arbitrator. Insofar as the interpretation of a contract is concerned, it is not for this Court to substitute its own decision with that of an Arbitrator, as observed in Sudarshan Trading Co. v. Government of Kerala . The Apex Court has in fact observed that so long as the view taken by an Arbitrator is plausible, though perhaps not the only correct view, the Award cannot be examined by the Court. The Arbitrator is the Judge chosen by the parties and his decision is final and the Court is precluded from re-appraising the conclusion or re-interpreting the terms of the contract.
10. If the aforesaid parameters are applied to the facts of the present case, it is found that the only dispute related to the mode and manner of calculation and the price on which calculations for customs duty has to be made. The Arbitrator has taken the actual value of the goods imported and thereafter calculated the customs duty on it as actually paid. This in nutshell accepts the mode and manner of calculation of the petitioner, which can hardly call for an interference in the present proceedings.
11. The objections to the claim No. 1 are thus rejected.
12. The second aspect relates to the rate of interest, which has been granted at 18% p.a. Learned Counsel for the petitioner agrees to the reduction of the interest rate to 15% p.a. up to the date of the decree and 12% p.a. from the date of the decree till the date of realisation which, in my considered view, is reasonable.
13. The Award stands modified to that extent.
14. The application stands disposed of.
CS(OS) 2383-A/99
15. Objections to the Award having been disposed of, the Award dated 2.7.1999 of the sole Arbitrator Ms. Shail Goel is made Rule of the Court with the modification that the rate of interest up to the date of decree shall be calculated at 15% p.a. instead of 18% p.a. and from the date of decree till the date of realisation at 12% p.a.
16. The parties are left to bear their own costs.
17. Decree sheet be drawn accordingly.
