Jharkhand High Court
Rungta Projects Limited vs Central Coalfields Limited on 13 January, 2023
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Arbitration Appeal No. 25 of 2011
Rungta Projects Limited, a Company duly registered under the
provisions of the Companies Act, 1956, having its registered office
at 301, Mangalam Building, 24 Hemanka Basu Sarani, P.O. -
G.P.O Kolkata, P.S. - Hare Street, District - Kolkata - 700001 and
its office at Vikash Bhawan, Bariatu Road, Bariatu P.S. - Lalpur,
P.O. - Ranchi University, District - Ranchi - 834008, Jharkhand,
through its Director Sri Ram Swaroop Rungta, son of late Ram
Kumar Rungta at Vikash Bhawan, Bariatu Road, Bariatu, P.S. -
Lalpur, P.O. - Ranchi University, District - Ranchi - 834008
... ... Claimant/Opposite Party/Appellant
Versus
Central Coalfields Limited, a subsidiary of Coal India Limited and
a Government of India undertaking having head office at
Darbhanga House, P.S. - Kotwali, P.O. - G.P.O Ranchi, District -
Ranchi, through its Chairman cum Managing Director at
Darbhanga House, P.S. - Kotwali, P.O. G.P.O Ranchi, District-
Ranchi ... ... Respondent/Petitioner/Respondent
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CORAM: HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
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For the Appellant : Mr. Pandey Neeraj Rai, Advocate
For the Respondents : Mr. A.K. Das, Advocate
: Mr. Sahay Gaurav Piyush, Advocate
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09/13.01.2023 Heard Mr. Pandey Neeraj Rai, learned counsel appearing on
behalf of the appellant.
2. Heard Mr. A.K. Das, learned counsel appearing on behalf of the
respondent along with Mr. Sahay Gaurav Piyush, Advocate.
Arguments of the Appellant.
3. The learned counsel for the appellant has submitted that the learned
court below has travelled beyond the permissible grounds for interference
under section 34 of the provisions of the Arbitrations and Conciliation Act,
1996 to set aside the award and has not appreciated the findings of the
award which is well reasoned and based on interpretation of the contract as
well as conduct of the parties and the attending circumstances.
4. The learned counsel for the appellant has submitted that the key
issue involved in the present case is as to whether the award was beyond the
terms of the contract and a further issue is as to whether the appellant
having accepted certain amount on 14.12.2008 during the pendency of the
arbitration proceedings by making an endorsement "no claim of the
claimant is outstanding as on date as per provision of agreement" can be
said to be a final settlement of claim between the parties and whether the
arbitrator could not have gone ahead and awarded any further amount at all
pursuant to the arbitration agreement.
5. The learned counsel has also submitted that the impugned order has
to be examined in the light of permissible scope of interference under
Section 34 of Arbitration and Conciliation Act, 1996. The specific case of
the appellant is that the award has been passed in terms of the contract and
the payment made on 14.12.2008 with the aforesaid endorsement has no
bearing in the matter. The further case of the appellant is that the learned
Arbitrator while passing the award has interpreted the various terms of
contract and considering the terms of contract, the learned arbitrator has
given the award within the terms of reference and in terms of the clauses of
the agreement and has not travelled beyond the contract of the parties.
6. The learned counsel has placed the entire award before this Court
and has submitted that the entire process was in three parts namely
extraction, loading, transportation & unloading. He submits that the loading
part was executed partly by pay loaders. He has submitted that the dispute
involved in the present case which remained for the Arbitrator to decide
was whether price escalation in diesel was payable on the diesel used in pay
loaders. The learned counsel submits that the Arbitrator after going through
the materials and the various clauses of contract, has recorded a specific
finding in para 30 (c) that in terms of clause 36 of the contract, all diesel
consuming machines were eligible for payment to the contractor of
compensation for increase or decrease in the price of diesel.
7. The learned counsel has placed clause 36 of the contract and he
submits that clause 36 of the contract is not confined to use of diesel in
surface miner. The learned counsel further submits that so far as the
formula is concerned, clause 36.3 gives the formula and the learned
Arbitrator has held that clause 36.3 will be deemed to be applicable for
operation 1 and 2 and the value of 'C' in the formula was decided by the
learned Arbitrator on the basis of materials.
8. Learned counsel submits that the learned Arbitrator was of the
specific view that so far as diesel consumption is concerned, the excavation
and loading could not be segregated. The learned counsel submits that the
learned Arbitrator having interpreted the contract and having taken a
plausible and possible view, there was no scope for interference in the
award under Section 34 of the Arbitration and Conciliation Act.
9. Learned counsel has submitted that the principles of interpretation of
contract is well settled that the contract is to be interpreted not only on the
plain reading of the contract, but also taking into consideration the
attending facts of the case. He submits that the learned Arbitrator has taken
the entire facts and the terms of the contract to interpret the contract and has
passed the award.
10. He has referred to a judgment reported in (2016) 12 SCC 592 para
13 to submit that construction of the terms of contract is primarily within
the domain of the Arbitrator. He has further referred to the judgment
reported in (2018) 1 SCC 718 para 10 to submit that if the Arbitrator has
taken one of the plausible view, the award is to be sustained. The learned
counsel has also referred to judgment passed by Hon'ble Supreme Court
reported in (2012) 5 SCC 306 para 43 to submit that even if it is not a
plausible view and if it is a possible view, then also the award is required to
be sustained. The learned counsel has also relied upon judgment reported in
(2018) 1 SCC 718 para 11 to submit that the question of interference in the
award would arise only when the interpretation given by the Arbitrator
shocks the conscience of the court. He has relied upon another judgment
reported in (2015) 3 SCC 49 para 56 to submit that the court's view with
regard to interpretation of contract will not prevail as the courts are not
sitting in appeal to the arbitral award.
11. The learned counsel has also referred to the judgment passed by
Hon'ble Supreme Court reported in (2003) 8 SCC 154 para 9 with regard to
payment made during the pendency of the arbitral award. He submits that
this judgment has been specifically referred to by the learned Arbitrator and
considered while proceeding further with the award and rejecting the
contention of the respondents that the claim was finally settled between the
parties.
Arguments of the Respondents.
12. The learned counsel for the respondents, on the other hand, while
opposing the prayer of the appellant has submitted that the impugned order
does not call for any interference. The learned court has considered the
award and has found that the same is fit to be set aside. He submits that the
award is beyond the terms of the contract. He has also submitted that there
was no question of making payment of any diesel escalation for the
purposes of diesel use in pay loaders as the formula prescribed for
calculation of diesel escalation specifically mentioned the use in surface
miners and he submits that the formula takes care of the entire gamut of
affairs irrespective of where the diesel is used. The learned counsel submits
that once the formula has been prescribed, the formula by itself could not
have been interfered and given a different interpretation by the learned
Arbitrator.
13. The learned counsel submits that the learned Arbitrator has not only
misinterpreted the contract, but has travelled beyond the contract and has
re-written the agreement between the parties.
14. The learned counsel has also submitted that the learned Arbitrator
could not have taken into consideration the study carried out by the
respondents on the basis of the report dated 29.11.2005 as the agreement
was concluded as back as on 08.04.2004. He submits that subsequent
circumstances cannot be used to interpret an agreement. The learned
counsel has heavily relied upon the aforesaid note put by the appellant at
the time of receiving the payment on 14.12.2008, though during the
pendency of the arbitration proceedings. He submits that there is no bar in
law for making payment of the entire dues during the pendency of the
arbitration agreement, the same having been received without any protest,
there was no scope for the learned Arbitrator to proceed further and pass
any award.
15. The learned counsel submits that since the arbitration proceeding
was pending, the appellant ought to have received the amount under protest
and such amount was admittedly received without any protest therefore the
learned arbitrator has wrongly passed the award.
16. The learned counsel has referred to the judgment passed by Hon'ble
Supreme Court reported in (1994) Supp. (3) SCC 126 para 5; (2000) 8 SCC
1 para 5 to submit that the claim beyond the agreement cannot be
entertained. He has also referred to a judgment passed by this Court
reported in (2001) 1 JLJR 48 para 16 and 17 to submit that in the said case,
the reference to arbitration was itself rejected on account of no dues
certificate given by the claimant. He has referred to judgment reported in
(2011) 15 SCC 101 para 11 to submit that the learned Arbitrator cannot
rewrite the terms of the contract. He has also referred to judgments reported
in (2006) 4 SCC 445 para 13 and 14 and AIR 2003 SC 2629 para 14, 22, 73
and 74 to submit that the award is fit to be set aside when it is against the
substantive provision of law and contrary to the contract.
17. Arguments concluded.
18. Post this case on 14.02.2023 for judgment.
(Anubha Rawat Choudhary, J.)
Saurav/
