Uttam Company vs S.G. Stock Services Ltd.
2008 Latest Caselaw 333 Del

JUDGMENT

Hima Kohli, J.

1. The present petition is filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (in short 'the Act') assailing the award dated 16th October, 2007 passed by the Arbitral Tribunal in respect of a claim submitted by the petitioner against the respondent. It is pertinent to note that the petitioner filed a claim against the respondent for a sum of Rs. 26.90 lacs along with interest @ 2% per month to be compounded on a monthly basis for the period of delay till the settlement of amount of the claim. The petitioner had also claimed a sum of Rs. 1.00 crore on account of loss of opportunities caused to it because of delay on the part of the respondent.

2. Under the impugned award, the Arbitral Tribunal awarded the petitioner/claimant a sum of Rs. 26,90,000/- along with interest @ 9% per annum w.e.f. 22.11.2006 to the date of payment of the amount. The petitioner was also allowed costs of Rs. 30,000/- against the respondent. However, the Arbitral Tribunal declined to grant any damages for loss of opportunities as claimed by the petitioner.

3. Aggrieved by the aforementioned award, the petitioner filed an application under Section 33 of the Act before the Arbitral Tribunal on 8.11.2007, which was rejected, vide order dated 28.11.2007 by the Arbitral Tribunal stating inter alia that the application was beyond the scope of Section 33 of the Act and that the petitioner had not made out any ground for passing of an additional award. As against the aforementioned award dated 16.10.2007 and the order dated 28.11.2007, the petitioner has filed the present petition under Section 34 of the Act.

4. The only ground taken on behalf of the petitioner to assail the impugned award is that the Arbitral Tribunal ought to have directed the respondent to pay to the petitioner, market value of the shares belonging to the petitioner. In this regard, counsel for the petitioner draws the attention of this Court to a letter dated 23.7.2007 submitted by the petitioner to the Arbitral Tribunal (Annexure-P-9), wherein the petitioner furnished the market rates of the shares retained by the respondent, as on 20th July, 2007. To decide the above objection, it will be relevant to peruse the prayer clause of the statement of claim preferred by the petitioner before the Arbitral Tribunal, which reads as under:

(i) Pass an award and decree thereby directing the defendants, individually, jointly and severally to pay us sum of Rs. 26.90 lac along with interest @ 2% per month to be compounded on monthly basis for the period of delay until settlement of our account.

(ii) Award the damages based on continuing delay by the respondent on account of loss of opportunities for Rs. One Crore for failure to ensure specific performance/compliance of NSE RULES/Guidelines/Circulars/Instructions.

(iii) Award the legal costs of the Arbitration Proceeding and Legal Fees/Consultancy Fees in favor of the claimant; and

(iv) Pass any other orders and/or give directions/instructions as deemed fit and proper in facts and circumstances of the case.

5. It is misconceived on the part of the petitioner to state that merely because the petitioner furnished to the Tribunal the latest value of the margin and security of shares allegedly illegally withheld by the respondent, as on 20th July, 2007, under cover of letter dated 23.7.2007, the Arbitral Tribunal ought to have awarded the market value of the shares to it. Once the petitioner had quantified its claim before the Arbitral Tribunal by specifically giving a figure of Rs. 26,90,000/- as payable by the respondent along with interest, the petitioner cannot now contend that the Arbitral Tribunal was under an obligation to consider the latest value of the margin and security of shares as on the date of passing of the award. Any such consideration, in the opinion of the Court, would be beyond the scope of the claim made by the petitioner before the Arbitral Tribunal.

6. Furthermore, the contention of the counsel for the petitioner that it was incumbent upon the Arbitral Tribunal to on its own take into consideration the aforesaid letter of the petitioner dated 20.7.2007 and award the petitioner the amounts on the basis of the rate of the shares as existing on 20.7.2007, in the opinion of the Court, cannot be sustained. If the argument of the petitioner that it was incumbent upon the Arbitral Tribunal to have taken into consideration the latest value of the margin and security of shares as on the date of passing of the award, is accepted then, the question would arise that had the value of the margin and security of shares plunged below the sum of Rs. 26,90,000/- at the time of passing of the award, would the petitioner have accepted the said reduced figure as payable to it by the respondent? The inevitable answer is in the negative.

7. The Arbitral Tribunal cannot be stated to be under any obligation to award to the petitioner the amounts that the petitioner had not even claimed before it. Having quantified the specific amount rather than claim the value of the margin and the security of shares at the time of filing its claim petition before the Arbitral Tribunal, the petitioner made its own choice. If the petitioner was inclined to claim the valuation of the margin and the security of shares against the respondent, nothing prevented it from seeking an amendment of the claim petition. This, however, was not done by the petitioner for reasons best known to it. It is now too late in the day for the petitioner to claim entitlement to the said amount.

8. Counsel for the petitioner also submits that as against its claim of interest @ 2% per month on a compound basis, the Arbitral Tribunal has awarded interest @ 9% per annum only, which is much below the claim made by the petitioner. This is not an objection which falls within the scope of Section 34 of the Act. The law is well settled that the scope of interference by the Court in an Arbitral award is very limited. This Court is not expected to sit in appeal or judgment over the judgment of the Arbitrator. In Hindustan Construction Co. Ltd. v. Governor of Orissa and Ors. , it was held that the Court cannot re-appreciate the material on the record. In Hindustan Iron Co. v. K. Shashikant and Co. , the Supreme Court held that the award of the Arbitrator ought not to be set aside for the reason that, in the opinion of the Court, the Arbitrator reached wrong conclusions or failed to appreciate the facts. The aforesaid judgments have been reiterated by the Supreme Court recently in the case of J.C. Budhraja v. Chairman, Orissa Mining Corporation Ltd. and Anr. dated 18.1.2008, being Civil Appeal Nos. 1971-1973 of 2000. In Podu Thozillar Sangam v. Balasubramania Foundary and Ors. reported in AIR 1987 SC 2045, it has been opined that it is only an error of law and not a mistake of fact committed by the arbitrator which can be adjudicated in the application/objection before the Court. Awarding interest at a rate lower than that claimed by the petitioner can hardly be stated to be an error of the nature which deserves interference by the Court.

9. Counsel for the petitioner has not taken any other ground to assail the impugned award passed by the Arbitral Tribunal.

10. The petition is rejected as being devoid of merits along with the pending application.