Jhang Cooperative Group Housing ... vs Pt. Munshi Ram And Associates Pvt. ...
2013 Latest Caselaw 2147 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI
%                          Judgment reserved on : 23rdApril, 2013
                           Judgment pronounced on: 9th May, 2013
+        FAO (OS) 582/2012

JHANG COOPERATIVE GROUP HOUSING SOCIETY LTD.
                                           ..... Appellant
              Through: Mr. J.P. Sengh, Sr. Advocate with
                       Mr. Sumeet Batra, Advocate.
                         versus
PT. MUNSHI RAM AND ASSOCIATES PVT. LTD.
                                           ..... Respondent
              Through: Ms. Anusuya Salwan and Ms. Renuka
                       Arora, Advocate
     CORAM:
     HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
     HON'BLE MR. JUSTICE SANJEEV SACHDEVA

SANJEEV SACHDEVA, J.

1. This is an appeal under Section 37 of the Arbitration and Conciliation

Act, 1996 (hereinafter referred to as the 'Said Act') impugning the judgment

dated 24th May, 2012, whereby the objections of the appellant under Section

34 of the Arbitration Act challenging the interim award dated 05 th July, 2002

as well as final award dated 27th September, 2002 were dismissed. The

objection petition under Section 34 of the Arbitration and Conciliation Act

impugning both the interim and the final award was filed on 02.01.2003.

2. The respondent had entered into an agreement with the appellant

society on dated 26th February, 1988 for construction of 490 residential units

at Plot No. 40, Sector-13, Rohini, New Delhi. The date of start of

construction stipulated in the work was 26th February, 1988 and the

stipulated date for completion was 25th August, 1990. The work was

delayed and ultimately the contract was rescinded by the appellant society

on 13th January, 2000.

3. Pursuant of the rescission of contract certain disputes and doubts arose

between the parties in the matter of execution of the said work. The

respondent invoked the Arbitration clause and the Administrator of the

appellant society, the Persona Designata appointed the Sole Arbitrator. On

resignation of the Sole Arbitrator, the Administrator appointed Sh. D.N.

Kathuria as the Sole Arbitrator who passed both the interim and the final

award.

4. During the pendency of the arbitration proceedings, both the parties

consented to passing of an interim award in respect of some of the claims

raised by the claimant in the arbitration proceedings.

5. In the interim award, the Arbitrator granted the relief of Declaration

holding that the appellant society was responsible for non-performance of

their obligation and consequently the work was prolonged. The Arbitrator

further held that the rescission/termination of contract was arbitrary and

without jurisdiction and he thus declared the rescission as illegal.

6. With regard to the claim in respect of the payment for the work done

in the 45th Running Account (RA) Bill and after the 45th R.A. Bill the

Arbitrator directed both the parties to submit joint measurements for the

remaining items and joint bill for the undisputed items. Consequent to the

direction both the parties submitted their joint measurement and joint bill for

undisputed items. The joint bill submitted by the parties indicated certain

disputed items which were left to be adjudicated by the Arbitrator.

7. The Arbitrator in the interim award directed the appellant to pay the

undisputed amount as mentioned in the joint bill and further with respect to

the disputed items decided to adjudicate the same in his final award.

8. The appellant did not challenge the interim award made and published

on 5th July, 2002 and it is only after the Arbitrator adjudicated upon the

remaining disputes and passed the final award dated 27.09.2002 that the

appellant filed a petition under Section 34 of the Arbitration and

Conciliation Act, 1996 objecting to both the interim award and the final

award.

9. The learned Single Judge vide the impugned order dated 24.05.2012

has held that the challenge to the interim award dated 5.7.2002 was time

barred and accordingly has rejected the same.

10. Section 2 (1) (c ) of the Said Act defines arbitral award to include an

interim award. Under Section 34 of the said Act recourse to a court against

an arbitral award has to be made within three months from the date on

which the party making the application receive the arbitral award. As per

Section 34 (3) of the Act, the court has been empowered to condone a

maximum delay of 30 days, subject to the applicant showing sufficient cause

which prevented the applicant from making the application within the said

period of three months and not thereafter. In the present case, admittedly

the objections to the interim award have neither been made within three

months from the date as stipulated in Section 34 (3) or in the further period

of 30 days as stipulated in the proviso thereto.

11. The learned Senior Counsel for the appellant has pointed out that the

interim award itself stipulates that the interim award is without prejudice to

the respective contentions of the parties, as stated in their pleadings and in

the final award the arbitrator has mentioned that the interim award may be

read in conjunction with the final award as the said interim award is part and

parcel of this award too. The learned Senior Counsel thus submits that since

the interim award is part of the final award, the same could be challenged

along with the final award within the limitation prescribed for challenging

the final award.

12. We find no merit in the submission of the learned Senior Counsel for

the appellant and are in agreement with the reasoning and finding of the

learned Single Judge in the impugned judgment. The interim award is an

award as defined under Section 2 (1) (c) of the Arbitration Act and thus a

recourse to a court against the said award had to be made within the period

of three months or the condonable period of 30 days as stipulated in Section

34 (3) of the Act.

13. The relief of declaration granted by the Arbitrator of illegal

rescission/termination of the contract became final since the same was never

challenged within the stipulated period. The stipulation in the interim award

that it is without prejudice to the respective contentions of the parties in our

view was for the purpose of leaving the other claims to be decided in the

final award on their own merit. The stipulation in the final award that the

interim award is part and parcel of the final award would not in any manner

extend the period of limitation for making recourse to a court against the

said interim award and as such we are in agreement with the learned Single

Judge that the objections to the interim award were clearly barred by

limitation and the Submission of the Learned Senior Counsel in this regard

is thus rejected.

14. With respect to the objections filed by the appellant against the final

award dated 27.09.2002 we may note that the law laid down by the Hon'ble

Supreme Court restricts the supervisory role of the courts while testing the

validity of an Arbitration Award. In the case of McDERMOTT

INTERNATION INC. vs. BURN STANDARD CO. LTD.AND OTHERS

(2006) 11 SCC 181, the Hon'ble Supreme Court has held as under:-

"The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias

by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it."

It is in the parameters as laid down by the Apex Court vis-à-vis the scope of

judicial intervention that the present appeal impugning the order dated

24.05.2012 has to be dealt with in respect to the final award published by the

sole arbitrator dated 27.09.2002. It is seen that the Arbitrator has elaborately

considered the various documents, submissions and evidence led by the

parties in respect of each claim which was left to be adjudicated by the

interim award. The Arbitrator has extensively gone into the evidence and

evaluated the entire material before him and has published a detailed

speaking award.

15. The law is no longer res integra and is settled that where the

Arbitrator has assessed the material and evidence placed before him in

detail, the court while considering the objections under Section 34 of the

said Act does not sit as a court of appeal and is not expected to re-appreciate

the entire evidence and reassess the case of the parties. The jurisdiction

under Section 34 is not appellate in nature and an award passed by an

Arbitrator cannot be set aside on the ground that it was erroneous. It is not

open to the court to interfere with the award merley because in the opinion

of the court, another view is possible. The duty of the court in these

circumstances is to see whether the view taken by the Arbitrator is a

plausible view on the facts, pleadings and evidence before the Arbitrator.

Even if on the assessment of material, the court while considering the

objections under Section 34 is of the view that there are two views possible

and the Arbitral Tribunal has taken one of the possible views which could

have been taken on the material before it, the court would be reluctant to

interfere. The court is not to substitute its view with the view of the

Arbitrator if the view taken by the Arbitrator is reasonable and plausible.

16. If the Arbitrator has taken a view which the court finds reasonable and

plausible, the court would certainly not interfere.

17. The extent of judicial scrutiny under Section 34 of the Arbitration Act

1996 is limited and scope of interference is narrow. Under Section 37, the

extent of judicial scrutiny and scope of interference is further narrower. An

appeal under Section 37 is like a second appeal, the first appeal being to the

court by way of objections under Section 34. Where there are concurrent

findings of facts and law, first by the Arbitral Tribunal which are then

confirmed by the court while dealing with objections under Section 34, in an

appeal under Section 37, the Appellate Court would be very cautious and

reluctant to interfere in the findings returned in the award by the Arbitral

Tribunal and confirmed by the court under Section 34.

18. As laid down by the Apex Court, the supervisory role of the court in

arbitration proceedings has been kept at a minimum level and this is because

the parties to the agreement make a conscious decision to exclude the courts

jurisdiction by opting for arbitration as the parties prefer the expediency and

finality offered by it.

19. The learned Single Judge has examined each claim awarded by the

learned Arbitrator in detail and after scrutinizing the same has found the

findings and reasoning to be justified and has declined to interfere in the

findings arrived at by the learned Arbitrator in respect of each claim. Once

the Arbitrator has returned a finding that delay in completion of the work

was attributable to the appellant society and that the rescission and

termination of the contract was illegal and more so since these findings are

not challenged by making a recourse against the interim award, the findings

arrived at by the learned Arbitrator in respect of the claims dealt with by the

learned Arbitrator in the final award cannot be said to be erroneous and the

learned Single Judge has rightly declined to interfere with the same.

20. The learned Single Judge has given detailed reasons for rejecting the

application filed by the appellants with which we are in complete agreement

more so in view of the fact that this court does not sit as a court of appeal to

reassess and re-examine the evidence led before the Arbitrator. Even on

examination of the material before us, we are of the view that the findings of

the Arbitrator are reasonable and justified in the facts of the present case.

21. The learned Senior Counsel tried to make out a case of fraud and

collusion between the Administrator and the contractor. We are unable to

accept this submission of the learned Senior Counsel for the reason that

there is neither such a plea raised before the Arbitrator or the learned Single

Judge nor any material has been placed on record before us to substantiate

this allegation. It is settled proposition of law that a plea or a ground not

raised before the Arbitral Tribunal would not be permitted to be raised in

objections against the award leave alone before the Appellate Court under

Section 37 considering an appeal under Section 37 of the said Act. The

submission in this regard is thus rejected.

22. We find no infirmity in the impugned order dated 24 th May, 2012.

The appeal is accordingly dismissed, leaving the parties to bear their own

costs.

SANJEEV SACHDEVA, J.

MAY 9, 2013                                    SANJAY KISHAN KAUL, J.
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