Madras High Court
The Managing Director vs K.Subramanian on 8 February, 2021
O.S.A.No.95 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 08.02.2021
CORAM :
THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
O.S.A.No.95 of 2020
1. The Managing Director
Tamil Nadu Fisheries Development Corporation Ltd.
No.167, Poonamallee High Road
Chetpet Eco Park Campus
Kilpauk, Chennai 600 010.
2. The General Manager
Tamil Nadu Fisheries Development Corporation Ltd.
No.167, Poonamallee High Road
Chetpet Eco Park Campus
Kilpauk, Chennai 600 010.
3. The Manager (Production and Sales)
Tamil Nadu Fisheries Development Corporation Ltd.
Sathanur Dam, Sathanur Village
Thandarampet Taluk
Tiruvannamalai District. ... Appellants
Vs.
1. K.Subramanian ... Respondent
Prayer: Appeal filed under Order XXXVI, Rule 1 of O.S. Rules read with
Clause 15 of the amended Letters Patent 1865 read with Section 37 of
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O.S.A.No.95 of 2020
the Arbitration and Conciliation Act and read with 13 of the
Commercial courts, Commercial Division and Commercial Appellate
Division of High Courts (Amendment) Act, 2018, against the order and
decree dated 21.06.2019 made in O.P.No.480 of 2017.
For Appellants :: Mr.Vijay Narayan
Advocate-General
Assisted by
Master Ganesh R
For Respondent :: Mrs.Radha Gopalan
For Ms.G.P.Bhargavi
JUDGMENT
(Delivered by the Hon'ble Chief Justice)
The respondent-award holder has not been called upon.
2. The matter pertains to the award of a fishing contract for a
period of five years from July 15, 2012 to July 14, 2017 in respect of
Sathanur Dam situated in Tiruvannamalai District. The respondent
herein was awarded the contract and there is no dispute that the
respondent paid a license fee of Rs.1,23,45,658/- and a further sum of
Rs.85,55,239/-, possibly on account of security.
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3. The short claim carried by the respondent to the Arbitral
Tribunal was that despite the exclusive fishing rights obtained by the
respondent under the agreement of July 13, 2012, the respondent
had, in fact, not been permitted to undertake any fishing activity and,
as a consequence, the entire investment made by the respondent was
lost. The respondent claimed loss of profit and the like by way of
damages and a further sum of Rs.45 lakh that the respondent claimed
to have expended in buying seedlings and other incidental material.
4. The matter hinges on a clause numbered as 41 in the tender
documents which was substantially re-produced and incorporated as
clauses (12) and (13) of the agreement of July 13, 2012. In essence,
the clause provided that fishermen registered with the appellant-body
could only be used for the purpose of fishing by the respondent and
outsiders would not be permitted so to do.
5. It appears that the respondent was interested in engaging
fishermen who operated in an around the Mettur Dam area for the
purpose of undertaking fishing activities at the Sathanur Dam waters
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O.S.A.No.95 of 2020
for which the respondent obtained the contract. This proposal of the
respondent was not approved by the appellants herein and disputes
arose between the parties. It also appears that there was a law and
order problem as a result of the resentment among the local fishermen
at Sathanur Dam, the persons who had continued fishing for a long
period. The appellants say that it is precisely for such purpose that the
clause was incorporated in the tender documents and was specifically
included in the final contract executed with the respondent herein. The
appellants say that the loss of employment opportunities to the local
residents resulted in a serious problem and it was such local residents
who did not permit any fishing activity to be undertaken at the
Sathanur Dam notwithstanding the contract awarded in favour of the
respondent.
6. The appellants say that in the Arbitrator accepting the
respondent's contention that there was no restriction imposed by the
agreement to engage only fishermen from the Sathanur Dam area, the
Arbitrator travelled beyond the agreement. The underlying submission
is that since the Arbitrator is a creature of the agreement between the
parties, the Arbitrator has no authority to go beyond the agreement
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O.S.A.No.95 of 2020
and accept any right asserted de hors the agreement by a party
thereto.
7. The appellants also refer to an order dated September 13,
2013 passed by this Court in possible proceedings under Section 9 of
the Arbitration and Conciliation Act, 1996. It is evident from the order
that the Court declined to give express permission to the respondent
herein to engage fishermen from Mettur Dam since the Court said that
it was not in a position to implement an order because of the law and
order problem which would arise at Sathanur Dam. The relevant order
did not express any opinion as to whether the respondent herein was
entitled to engage the fishermen from Mettur Dam for undertaking
fishing activities at the Sathanur Dam.
8. In the award of July 13, 2012, several issues were framed.
Apropos the issue relating to the respondent seeking to engage
fishermen from Mettur Dam to undertake the fishing activity at
Sathanur Dam, the Arbitrator agreed with the respondent to the effect
that no territorial or geographical limit has been set in the contract of
July 13, 2012 for the respondent to be obliged to only engage
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O.S.A.No.95 of 2020
fishermen registered with the appellant body who were operating in
the Sathanur Dam waters. Indeed, subsequent contracts awarded by
the appellants were placed on record before the Arbitrator to
demonstrate that the relevant clauses in the subsequent contracts had
been modified to expressly refer to fishermen registered with the
appellants pertaining to the Sathanur Dam region. The Arbitrator
reasoned that if the geographical limits had not been indicated in the
relevant contract, but were included in the subsequent contracts, it
implied that the appellants were seeking to address a problem that
they had faced in working out the subject contract.
9. It is elementary that the authority that is exercised in
proceedings under Section 34 of the Act of 1996 is not appellate, but
merely supervisory. It must also be acknowledged that the
atmosphere in the appellate stage of the proceedings under Section 34
of the Act is even more rarified. The extent of interference with an
award by an Appellate Court is extremely limited, particularly if the
award has passed muster in the Court of the first instance.
10. Loosely speaking, arbitral awards are tinkered with upon an
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O.S.A.No.95 of 2020
error of jurisdiction being discovered rather than errors within the
jurisdiction of the Arbitrator's authority. In other words, if the award is
contrary to the underlying agreement between the parties or if the
award is contrary to the law of the land, the Court would be excited to
step in. If errors are committed within the domain of the Arbitrator's
authority, the Court would be minded to look the other way and leave
the parties to the consequence of having approached a consensual
forum rather than come to Court to have their disputes adjudicated. It
is also elementary that the Arbitrator is the sole adjudicator of the
quality and the quantity of evidence before it. The Court cannot
supplant its discussion in the place of the Arbitrator's.
11. In the present case, the Arbitrator found that since the
relevant clauses (12) and (13) of the principal agreement between the
parties did not specify that the registered fishermen who had to be
engaged were to hail from the Sathanur Dam region or those who had
undertaken fishing earlier at the Sathanur Dam, the matter does not
call for any interference. The Arbitrator also found that a
clarification had been made in the subsequent contracts, as noticed
above.
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12. On the quantum of the award, the appellants question the
propriety of the Arbitrator allowing the entire claim and permitting
interest at an exorbitant rate. There were four claims in all before the
Arbitrator. The first claim pertained to the refund of a total amount of
about Rs.2.09 crore comprising the license fee and the security deposit
that had been made by the contractor. The second claim was on
account of an additional amount of Rs.45 lakh apparently expended by
the contractor to purchase seedlings and incidentals. The third claim
was on account of damages and loss of profit and was left unspecified.
The fourth claim was on account of the interest payable on the
amounts deposited.
13. The Arbitrator found that the license fee and the security
deposit had been deposited and there was no dispute in such regard.
Thus, the Arbitrator directed a sum of about Rs.2.09 crore to be
refunded to the contractor. The Arbitrator also allowed interest on the
individual amounts of Rs.1,23,45,678/- and Rs.85,55,239/- at the
rate of 12% per annum from the dates when such amounts were
deposited by the contractor. The Arbitrator disregarded the claim on
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O.S.A.No.95 of 2020
account of Rs.45 lakh for seedlings and incidentals since the Arbitrator
held that the claimant in the Arbitral reference had failed to establish
the same. The Arbitrator did not even refer to the claim on account of
loss of profit or damages since it does not appear that any evidence
was carried to the Arbitral Tribunal by the claimant in such regard. The
Arbitrator awarded interest on the two amounts aforesaid till the date
of the award and interest on the combined amount, also at the rate of
12% per annum, from the date of the award. There can be no fault
found with the amounts awarded or the quantum of interest that has
been granted by the Arbitrator. In addition, the Arbitrator has awarded
costs assessed at Rs.5 lakh. Considering the time that may have been
expended in course of the Arbitral reference and the actual expenses
incurred, a sum of Rs.5 lakh does not appear to be unreasonable, nor
does it shock the conscience of the Court.
14. For the reasons aforesaid, the award dated May 15, 2017
appears to be eminently justified and it was for good reason that such
award was not interfered with by the Arbitral Court. As a consequence,
the judgment and order impugned herein dated June 21, 2019 call for
no modification.
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O.S.A.No.95 of 2020
OSA No.95 of 2020 is dismissed. There will be no order as to
costs. Consequently, CMP Nos.3988 and 14509 of 2020 are also
dismissed.
(S.B., CJ.) (S.K.R., J.)
08.02.2021
Index : Yes
kpl
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O.S.A.No.95 of 2020
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY, J.
kpl
O.S.A.No.95 of 2020
08.02.2021
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