Monsher Enterprises vs International Airport Authority ...
2007 Latest Caselaw 615 Del

JUDGMENT

Sanjay Kishan Kaul, J.

IA No. 10431/1991 (Under Sections 30 and 33 of the Arbitration Act, 1940)

1. A contract was awarded to the petitioner for installation and commissioning of fire fighting equipments at the Delhi International Airport. Clause 25 of the Standard Conditions of Contract provided for arbitration as the method for resolution of disputes. The disputes having arisen on account of claims by the petitioner, the matter was referred by the designated person for the sole arbitration of Mr. A. Sankaran, who made and published his award dated 28.11.1990 making a total award in the sum ofRs. 10,59,182.15/- along with interest. The respondent aggrieved by the same has filed the present objections.

2. Learned Counsel for the respondent does not dispute that while considering objections under Sections 30 and 33 of the Arbitration Act, 1940 ('the said Act' for short), this Court cannot sit as a court of appeal. It is not the function of this Court to interfere with an award merely on the basis that this Court would come to a different conclusion on the material available before the arbitrator. It is only in the eventuality of the award being totally perverse that such an interference is called for. In fact the Apex Court has observed that in the absence of the award being absurd, reasonableness is not a matter to be considered by the Court as appraisement of evidence by the arbitrator is not ordinarily a matter for 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. .

3. Insofar as interpretation of a contract is concerned, again the same is a matter for an arbitrator, on which the court does not substitute its own decision as observed by the Apex Court in Sudarsan Trading Co. v. Govt of Kerala . So long as the view taken by the arbitrator is a plausible view, though perhaps not the only correct view, the award cannot be examined by the Court.

4. In view of the aforesaid settled legal position, learned Counsel for the respondent fairly stated that it is not necessary to go through each of the grounds of the objections as most of the grounds are really in the nature of a grievance about the failure of the arbitrator to appraise the evidence which does not fall for scrutiny within the jurisdiction of Sections 30 and 33 of the said Act. Learned Counsel thus confined his submissions to the following aspects:

1) Enlargement of the scope of the reference by the arbitrator in the form

i) Increase in the amount of the claim of the petitioner than what was referred to arbitration; and

ii) Additional amounts being awarded to the petitioner which were not even referred for arbitr ation.

2) Arbitrator considering the documents filed after conclusion of hearing; such documents being filed with the synopsis and no opportunity being given to the parties to meet the case based on the documents.

Learned Counsel for the petitioner on the other hand referred to the initial communication dated 05.01.1990 in terms whereof the disputes were referred to arbitration. The letter reads as under:

Your Accounts Department has just cleared our 15th and Final Bill. Vide our letter No. Mon/199/1472 dated 09.12.1989, we have requested the Executive Engineer (C) III to send us the certified copy of the Final Bill, but we have so far not received the same.

The final payment has been made by you after more than three and a half years of completion of the work. Since we do not have the certified copy of the final bill, we are unable to put up our various claims. We request you to kindly instruct the concerned Executive Engineer/Accounts Department to send us the certified copy of the bill immediately.

In the meantime, from the records available with us, we have prepared a statement showing the summary of our claims, which is enclosed herewith.

Please treat this letter as notice of arbitration and appoint necessary arbitrators immediately. We would appreciate if you will appoint one of the arbitrators from TAC, New Delhi or Bombay.

On hearing from you as to the appointment of the Arbitrators, we will arrange to submit our detailed claim in respect of summary stated above.

5. A reading of the aforesaid letter shows that the petitioner did state that the final bill had not been finalized and thus there may be possibly other claims raised. It is, however, equally true that while making the reference, only the amounts originally claimed were referred and there was no reference of any other claims. However, while making the claims before the arbitrator, the petitioner enhanced the claims originally made and sought to add additional claims.

6. Learned Counsel for the petitioner did not dispute that there has to be reference of all the claims but seeks to canvass that the aforesaid letter dated 05.01.1990 reserved the right of the petitioner to file the additional claims. Learned Counsel also sought to suggest that no objections were raised by the respondent about adjudication of the said claims.

7. In my considered view, legal position in respect of the aforesaid is quite clear. The arbitrator is a creature of the agreement and derives its authority to adjudicate as a consequence of the reference made to him. Thus he can only adjudicate upon the matter as referred to him. If the designated authority fails to refer to certain matters which it ought to refer, the remedy of the party is under Section 20 of the said Act. In the present case, the petitioner never asked for reference of these additional or increased claims nor did he take recourse to the proceedings under Section 20 of the said Act seeking reference of the same.

8. Insofar as the aspect of acquiescence and consent of the respondent is concerned, learned Counsel for the respondent has drawn my attention to the reply filed before the arbitrator where it is categorically stated that by letter dated 05.01.1990 certain claims had been raised giving figures of the amounts claimed against each of the claims and it is on that basis vide the letter dated 04.04.1990 that the designated person had referred the claims for arbitration to the arbitrator. The subsequently furnished claims of the petitioner were a departure from what was confined in the aforesaid letter dated 05.01.1990. Not only this, while dealing with each of the claims respondent had not categorically stated that it is the original claim which is to be considered.

9. In view of the aforesaid, I am unable to accept the plea of the learned Counsel for the petitioner that there is acquiescence or consent insofar as arbitrator adjudicating upon the increased amounts of the claims or the additional amounts of the claims are concerned.

10. As far as the second objection is concerned, I again find merit in the same.

11. I fail to appreciate the procedure whereby documents can be filed after conclusion of hearing. Such documents can be filed only on the notice to the other side and with an opportunity to the opposite party to meet the case arising from those documents. Learned Counsel for the petitioner did seek to contend that even the respondent sought to file some documents with the written synopsis. However, two wrongs will not make a right. Question of consideration of documents and taking them as material for making an award after conclusion of hearing without an opportunity to the other side to meet the documents certainly, in my considered view, amounts to misconduct in law. The application of the respondent is thus liable to be allowed and the award of the sole arbitrator Mr. A. Sankaran dated 28.11.1990 is set aside.

CS(OS) No. 17/1991

1. In view of the award of the sole arbitrator A. Sankaran having been set aside, no further directions are called for making the award rule of the Court. However, it must be noticed that the dispute is extremely old and now needs to be finally settled. Parties had led their evidence before the earlier arbitrator.

2. Parties seem to want to produce additional documents as filed at the stage of submission of synopsis on conclusion of final hearing before the arbitrator and thus liberty is given to the parties to lead evidence in that behalf. Records of the earlier arbitrator can be transmitted to the new arbitrator so that the matter is confined only to leading of such additional evidence and final hearing of the matter.

3. Learned Counsels for the parties state that in view of the limited nature of proceedings to be held before the arbitrator, which are for leading the additional evidence of both the parties in respect of documents already filed on record along with written synopsis and the final hearing to be concluded, not more than five to six sittings may be required. Further disputes having arisen as per the statement of claim, the arbitrator would now decide the complete claims as made in the statement of claim. There is an agreement between the counsels in this behalf.

4. Justice R.C. Chopra (Retd) of this Court is appointed as the Sole Arbitrator to decide the disputes between the parties. The arbitrator will fix its own sitting fee subject to a maximum of total fee of Rs 1.5 lakh. The parties will equally bear the arbitrator's fee.

5. The suit is disposed in the aforesaid terms leaving the parties to bear their own costs.

6. Intimation be sent to the arbitrator expeditiously and the records be also transmitted to the arbitrator.