Union Of India Thr Gen Manager And ... vs M/S Modi Enterprises
2022 Latest Caselaw 3313 Raj/2

      HIGH COURT OF JUDICATURE FOR RAJASTHAN
                  BENCH AT JAIPUR

        1. S.B. Civil Miscellaneous Appeal No. 971/2017

1.    Union of India Through The General Manager, North
      Western Railway, Jaipur
2.    Deputy Chief Engineer              Construction,        North    Western
      Railway, Jodhpur
                                                                ----Appellants
                                 Versus
M/s Modi Enterprises Registered Partnership Firm, Registered
Office At 5-C-111, Jai Narayan Vyas Colony, Bikaner, Through
Partner Shri Aatma Ram S/o Shri Hanuman Modi
                                                               ----Respondent
                           Connected With
        2. S.B. Civil Miscellaneous Appeal No. 968/2017
1.    Union of India Through The General Manager, North
      Western Railway, Jaipur
2.    Deputy Chief Engineer (Construction), North Western
      Railway, Jodhpur
                                                                ----Appellants
                                 Versus
M/s Hanumandas Chaghanlal Registered Partnership Firm,
Registered Office At 5-C-110, Jai Narayan Vyas Colony, Bikaner,
Through Partner Shri Aatma Ram S/o Shri Hanuman Modi
                                                               ----Respondent
        3. S.B. Civil Miscellaneous Appeal No. 969/2017
1.    The Union of India Through The General Manager, North
      Western Railway, Jaipur.
2.    Dy. Chief Engineer (construction), North Western Railway,
      Jodhpur.
                                                                ----Appellants
                                 Versus
M/s Hanuman Das-Chhagan Lal (Registered Partnership Firm),
Registered Office 5 C/110, Jai Narayan Vyas Colony, Bikaner
through the Partner -Shri Atma Ram S/o Shri Hanuman Modi.
                                                               ----Respondent
        4. S.B. Civil Miscellaneous Appeal No. 972/2017
1.    Union of India Through General Manager, North Western
      Railway Jaipur
2.    The Deputy Engineer (Construction)                      North,   Western
      Railway Jodhpur (Rajasthan)
                                                                ----Appellants
                                 Versus
M/s Hanuman Das Chhagan Lal Registered Partnership Firm
Having Its Registered Office At 5-C-110, Jaynarayan Vyas

                  (Downloaded on 26/04/2022 at 09:40:35 PM)
                                          (2 of 16)                    [CMA-971/2017]


Colony, Bikaner through its Partner Shri Atmaram son of
Hanuman Modi.
                                                                  ----Respondent
         5. S.B. Civil Miscellaneous Appeal No. 973/2017
1.     Union of India Through General Manager, North Western
       Railway, Jaipur
2.     The Deputy Engineer                Construction,           North    Western
       Railway, Jodhpur Raj.
                                                                    ----Appellants
                                   Versus
M/s Hanuman Das Chhagan Lal Registered Partnership Firm,
Having Its Registered Office At 5-C-110, Jaynarayan Vyas
Colony, Bikaner Through Its Partner Shri Atmaram S/o Hanuman
Modi
                                                                  ----Respondent
         6. S.B. Civil Miscellaneous Appeal No. 974/2017
1.     The Union of India Through The General Manager, North
       Western Railways, Jaipur.
2.     The General       Manager,         North-West            Railway,   Jodhpur
       Rajasthan
                                                                    ----Appellants
                                   Versus
M/s Hanuman Das Chhagan Lal Registered Partnership Firm
Having Its Registered Office At 5-C-110, Jaynarayan Vyas
Colony, Bikaner through Partner Shri Atmaram S/o Shri
Hanuman Modi.
                                                                  ----Respondent


For Appellant(s)         :     Mr. P.C. Sharma
                               Mr. S.N. Meena
                               Mr. Aslam Khan
For Respondent(s)        :     Mr. R.K. Agrawal, Sr. Advocate with
                               Mr. Jatin Agrawal



           HON'BLE MR. JUSTICE SUDESH BANSAL

                                Judgment

JUDGMENT RESERVED ON                                 : 18/04/2022
JUDGMENT PRONOUNCED ON                               : April _26th_, 2022
BY THE COURT:

1. All these appeals have been filed by appellant-non-claimant

Union of India through the General Manager North Western

Railway, Jaipur (hereafter `the Northern Railways') invoking the

(3 of 16) [CMA-971/2017]

jurisdiction of High Court under Section 37(1)(c) of the Arbitration

and Conciliation Act, 1996 (hereinafter "the A&C Act of 1996")

assailing the order dated 21-11-2016 passed by the Additional

District Judge, No.1, Jaipur Metropolitan, Jaipur under Section 34

of the A&C Act of 1996 to set aside the arbitral award dated 17-7-

2010 passed by the Sole Arbitrator in favour of respondent

claimant firms (hereafter `the claimant firms').

Since in all these appeals the impugned order and arbitral

awards are verbatim involving common issues, hence, with

consent of learned counsel for both parties, these appeals were

heard together and would stand decided by this common order. SB

Civil Misc. Appeal No.971/2017 is taken as a lead case.

2. Relevant facts which may be recapitulated succinctly are that

Northern Railways in the year 1992-93, during undertaking the

process of conversion of the Railway track from meter gauge to

broad gauge, awarded a contract to claimants for supply and

stacking of 21000 cum 65 mm gauge hard stone ballast as per

Northern Railway specifications along the track from KM 01 to 15

between stations Merta road to Gotan one Merta Road-Jodhpur

section. Pursuant to the agreement, work order dated 29-6-1992

was issued and the contractual work was completed by claimants

by 30-6-1993. During progress of the awarded contractual work,

concerned officers of Northern Railways after checking quality and

quantity of stone ballast made payments to claimants from time to

time. After completion of the work, a re-checking was conducted

by one K.D. Ralh, Deputy Chief Engineer and his team and it was

found that stone ballast supplied was short in supply and was also

of inferior quality. Consequently, all security deposits of claimants

(4 of 16) [CMA-971/2017]

were forfeited, due payments were freeze and bank accounts were

seized as also claimants were declared black-listed.

3. It appears from the record that initially claimants challenged

the action of Northern Railways by of filing SB Civil Writ petitions

No.5628/1994 and 1497/1994. In both writ petitions, Northern

Railways raised objection that the dispute arises out of contractual

matter, entailing disputed questions of facts, hence either claimant

firms should have approached to Civil Court or they could have

invoked arbitration proceedings in view of arbitration clause

incorporated in the agreements. Accepting preliminary objections

of the Northern Railways, the High Court dismissed writ petitions

vide order dated 25-9-2000 leaving open to claimants to avail the

alternative remedy.

4. It is worthwhile to mention here that during course of writ

petitions, claimants have also approached the Hon'ble Supreme

Court feeling aggrieved by an interim order and Hon'ble Supreme

Court vide order dated 3-4-1995 modified the interim order

issuing directions to Northern Railways to deposit full amount

(Rs.70 lacs) in fixed deposit in bank. Said amount was allowed to

remain in FDR, while deciding the writ petitions by the High Court.

5. Claimants invoked arbitration clause 64, enshrined in the

agreement, and asked the Northern Railways to appoint arbitrator.

However, no arbitrator was appointed by the Northern Railways.

Hence, claimants approached before the High Court for

appointment of Arbitrator under Section 11(6) of the A&C Act of

1996 by filing arbitration application. The High Court turned down

objections of the Northern Railways regarding maintainability of

arbitration application and vide order dated 1-6-2006 appointed

(5 of 16) [CMA-971/2017]

Arbitral Tribunal of the Sole Arbitrator of Justice O.P. Bishnoi

(Retired High Court Judge) to adjudicate disputes between parties.

6. Claimants submitted their claim petitions before the Arbitral

Tribunal. The Northern Railways submitted reply to claims as also

counter claims alleging non performance and faulty performance

by claimants, as also raised objections regarding maintainability of

arbitration proceedings.

7. The Arbitral Tribunal considering the nature of dispute, which

falls within arbitration agreement between parties, formulated two

points for determination in following terms:-

"(1) Whether the material in question supplied by the claimant was not as per the agreed specifications and was deficient in quality as well as in quantity? (2) Whether, these arbitration proceedings are not maintainable?"

8. The Arbitral Tribunal after recording evidence of both parties

on their respective claims and counter claims decided both points

in favour of claimants and against the Northern Railways and

passed the award dated 17-7-2010 in following terms:-

"Consequently none of the contentions raised on behalf of the Railways has any legal merit and the point is decided in favour of the claimant and against the Railways.

In the light of the finding on point No.1 question of awarding any counter-claim does not arise. The award is, therefore, passed in the following terms:-

(1) It is not proved that material supplied by the claimant was deficient in quality or quantity. (2) Consequently, the claimant is found entitled to get all the dues and payments for the material supplied by it without any deductions from the Railways and all the actions taken against the claimant on the basis of the report of K.D. Ralh as well as on the vigilance report are found to be uncalled for and without any legal basis.

(3) The claimant's money which was seized by the Railways and which is lying in the Bank as Fixed Deposit under the orders of the Hon'ble Supreme Court (Rs.70,00,000/- in six cases) shall be refunded to the claimant, along with interest which has accrued. In addition to this another Rs.41,877/- (in six cases) belonging to the claimant are lying with the Railways.

(6 of 16) [CMA-971/2017]

The claimant is entitled to its refund along with interest at the same rate at which the interest is paid by the Bank on the said fixed deposit of Rs.70,00,000/- from the date of the seizure/ forfeiture of the money to the date of payment.

(4) The claimant is entitled to the costs of this arbitration from the Railways which are assessed at Rs.50,000/- in this case."

9. The Northern Railways challenged the arbiral award by

moving application under Section 34 of the A&C Act of 1996

before the District Judge, Jaipur Metropolitan. The same was

transferred, heard and decided by the court of Additional District

Judge No.1, Jaipur Metropolitan vide order dated 21-11-2016.

10. A perusal of the order dated 21-11-2016 shows that the

court considered all objections raised by the Northern Railways,

but neither the arbitral award was found in contravention with

fundamental policy of India, nor in conflict with the most basic

notions of morality or justice, nor it was found that the arbitral

award deals with a dispute not contemplated in terms of

statement to arbitration and no patent illegality appearing on the

face of award was found on merits, except on following two

points:-

(i) In view of clause 16(2) and 64(5) of the General Conditions of the Contract (hereinafter `the GCC') interest on the seized amount of claimant lying in fixed deposit Rs.70 lacs was found to be payable from the date of award. Whereas the Arbitrator allowed the interest from the date of seizure/ forfeiture, hence, to this extent the award was modified in favour of the Northern Railways.

(ii) In view of clause 64(6) of the GCC, the cost of arbitration Rs.50,000/- allowed by arbitrator to claimant, was set aside in favour of appellant the Northern Railways.

11. Thus, finally while deciding application of the Northern

Railways under Section 34 of the A&C Act of 1996, vide order

dated 21-11-2016 following order was passed:-

(7 of 16) [CMA-971/2017]

^^vkifRrdrkZ Hkkjr la?k o vU; dk vkifRr izkFkZuk i= vUrxZr /kkjk 34 vkjchVªs"ku ,.M dkWulhfy;s"ku ,DV] 1996] fo}ku iap egksn; }kjk DysesaV i{k dks fnyk;s x;s C;kt ,oa ipkl gtkj :i;s vkfcZVªs"ku dksLV fnyk;s tkus dh gn rd vkaf"kd :i ls Lohdkj fd;k tkdj "ks'k izkFkZuk izkFkhZx.k vkifRrdrkZx.k [kkfjt dh tkrh gS rFkk fo}ku iap egksn; }kjk ikfjr iapkV fn- 17-07-2010 fuEu izdkj Modified :i esa iq'Vh fd;k tkrk gS & ¼1½ It is not proved that material supplied by the claimant was deficient in quality or quantity.

(2) Consequently, the claimant is found entitled to get all the dues and payments for the material supplied by it without any deduction from the Railways and all the actions taken against the claimants on the basis of the report of K.D. Ralh as well as on the vigilance report are found to be uncalled for and without any legal basis.

(3) The claimant's money which was seized by the Railway and which is lying in the Bank as Fixed deposit under the order of the Hon'ble Supreme Court (70,00,000/- in six cases) shall be refunded to the claimant along with interest which has accrued. In addition to this another Rs. 41,877/- (in six cases) belonging to the claimant are lying with the railways. fo}ku iap egksn; }kjk ikfjr mDr vkns"k dh iqf"V dh tkrh gS rFkk iapkV esa C;kt ds lEcU/k esa fo}ku iap egksn; }kjk ikfjr vkns"k esa fuEu izdkj Modified fd;k tkdj vkaf"kd :i ls iq'Vh dh tkrh gS & The claimant is entitled to its refund along with interest at the same rate at which the interest is paid by the Bank on the said fixed deposit of Rs. 70,00,000/- (in six cases) from the date of the Award to the date of payment. rFkk fo}ku iap egksn; }kjk vius vkns"k esa [email protected] vkifRrdrkZ dks ipkl gtkj :i;s vkfcZVªs"ku dksLV fnyk;s tkus dk vkns"k vikLr fd;k tkrk gSA^^

12. Appellant, the Northern Railways in present appeal, has

assailed the final order dated 21-11-2016 raising following

grounds:-

(i) Appointment of Arbitrator was not in terms of clause 63 and 64 of the GCC.

(ii) The Arbitrator has travelled beyond the reference and has not considered the claim as item wise, according to clause 64 of the GCC. Hence, the award is against the Public Policy of India.

(c) The Arbitrator has not considered clauses 63, 64, 65 and 45 of the GCC, hence the award is non speaking one.

(d) The Arbitrator and the District Judge have not considered their submissions and the award is beyond the agreement.

(e) Under Sections 34 of the A&C Act of 1996, the court could not have modified the award while dismissing objection application of the Northern Railways.

13. Heard learned counsel for both parties in detail as also

considered their written submissions, perused the impugned

award dated 17-7-2010 as also the impugned order dated 21-11-

2016 passed by the court deciding application under Section 34 of

the A&C Act of 1996.

14. At the outset, this court finds that appellant the Northern

Railways raised objections about the maintainability of arbitration

(8 of 16) [CMA-971/2017]

proceedings before the Arbitrator by taking resort to clause 63

and 64 of the GCC. A perusal of the impugned award shows that

while deciding the objection in this regard, the objection raised by

the Northern Railways has been dealt with in detail taking into

account all clauses of the GCC, including clauses 45, 63, 64 and

65. It was observed by the Arbitrator that, while rejecting the

objection of the Northern Railways in this regard, the Arbitral

Tribunal has been appointed by the High Court vide order dated 1-

6-2006, and the said order was never challenged by appellant the

Northern Railways. Secondly, the appellant Northern Railways was

found guilty of not following clause 45 of the GCC as rechecking/

re-evaluation of the material supplied and worked done by

claimant by the vigilance branch as also by one K.D. Ralh and his

team was conducted without any prior notice to contractor/

claimant. That apart, such objection was also raised in application

under Section 34 of the A&C Act of 1996 before the District Judge,

who has also dealt with this issue and turned down vide order

dated 21-11-2016. This court finds that such objection raised by

appellant the Northern Railways has rightly been turned down by

the Arbitrator as well as the court below on appreciation of facts

and relevant clauses of the GCC, and such objection has no merits

for acceptance in this appeal, hence rejected.

15. So far as the second objection of the Northern Railways is

concerned that the Arbitrator has travelled beyond the reference

and did not consider the claim item-wise, this objection was also

dealt with by the Arbitrator as well as by the court below. The

Arbitrator has considered the issue as to whether the action of the

(9 of 16) [CMA-971/2017]

Northern Railways of rechecking/ re-evaluation of material

supplied and work done by contractor stands in accordance with

clause 45 of the GCC or not and further the Northern Railways has

rightly seized and freezed security deposit and dues of claimants

or not?

16. Considering submissions of both parties the Arbitrator

concluded that the Deputy Chief Engineer K.D. Ralh, who

conducted re-checking of supplied material and found the same to

be deficient and of inferior quality, did not appear and filed

affidavit to support the case of Railways. The report of Vigilance

team, who conducted checking of supplied material, and the

report of Mr. K.D. Ralh also were not produced before the

Arbitrator. Nor any record of enquiry against the officers, who

allegedly colluded with the firm, was submitted. Railways argued

before the Arbitrator that compliance of clause 45 of the GCC was

optional. And that prior to re-evaluation of supplied material by

Mr. K.D. Ralh no proper notice was issued to claimant firm for re-

evaluation and such action was found by the Arbitrator against

principles of natural justice, as also the clause 45 of the GCC.

Further notice dated 9/10-12-1993 (Ex.C-4) informing the

claimant firm about re-evaluation of supplied material indicated

that re-evaluation was done by vigilance team, and on the basis of

report of vigilance team Mr. K.D. Ralh was to carry out detailed

checking. Pursuant thereto the claimant vide letter dated 12-12-

1993 (Ex.C-5) to Mr. K.D. Ralh sought information about the date

and time of re-evaluation. But Mr.K.D. Ralh vide letter dated 14-2-

1994 (Ex.C-6) informed that re-evaluation was started on 10-11-

                                            (10 of 16)                 [CMA-971/2017]


1993     and   completed      on     10-12-1993.           Thus,    the   Arbitrator

concluded that provisions of clause 45 of the GCC was violated by

Railways and the issuance of notice dated 9/10-12-1993 was mere

formality. Therefore, the issue No.1 decided in favour of the

claimant firm. Hence, it is not acceptable that the Arbitrator

travelled beyond the reference. The Arbitrator has considered the

whole claim, taking into account clauses 63, 64, 65 and 45 of the

GCC and perusal of the award shows that the same is well

reasoned and speaking one. There is no contingency pointed out

by counsel for appellant the Northern Railways as to how and in

what manner the Arbitral Award is beyond the terms of

agreement, once it is confined to the issue related to seizure of

amount of security deposit and non payment of dues of claimant.

17. So far the argument raised by appellant Northern Railways

that the court could not have modified the award while dismissing

its objection under Section 34 of the A&C Act of 1996 is

concerned. Firstly, the argument on the face of it goes against the

appellant Northern Railways. The modification of award with

regard to interest from the date of seizure to the date of award

and setting aside the cost part are in favour of appellant Northern

Railways. Secondly, claimants have not filed any appeal against

the modification of award. Thirdly, such modification was made

assigning reasons as reflected in the order dated 21-11-2016.

Hence, appellant Northern Railways cannot challenge such

modification made in its favour and on this ground only

interference in the impugned order can not be called for by this

court while exercising powers under Section 37 of the A&C Act of

1996.

(11 of 16) [CMA-971/2017]

18. As far as interference called for by appellant Northern

Railways in order dated 21-11-2016 on merits are concerned, this

court has considered the scope of Section 37 of the A&C Act of

1996 in case of National Highway Authority of India Vs.

Satish Agarwal, SBC Miscellaneous Appeal No.974/2018,

decided on 5-2-2022, and held as under:-

It is needless to iterate that the scope of appeal under Section 37 of the Act of 1996, against the order passed under Section 34 of the Act of 1996 may not be expanded and stretched beyond the scope of interference with the arbitral award within the contours of Section 34(2), 2-A and 3 of the Act of 1996. It is settled proposition of law that if any case falls within the four corners of any of the grounds as mentioned under Section 34 of the Act of 1996, the Court has jurisdiction either to set aside or to interfere with the abritral award. The Hon'ble Supreme Court, in catena of judgments has considered and propounded as to when and under which circumstances, scope of Section 34 can be invoked to set aside or to interfere with the arbitral award. Few of the judgments of the Hon'ble Supreme Court are as under:-

(i) In the case of Renusagar Power Co. Ltd. Versus General Electric Co. reported in [1994 supp 1 SCC 644], it was held that an arbitral award can be set aside if it is contrary to (a) fundamental policy of Indian Law or (b) the interest of India, or (c) justice or morality.

(ii) In the case of ONGC Ltd. v. Saw Pipes Ltd. reported in (2003) 5 SCC 705, the Supreme Court added the word "patent illegality" to the above referred three grounds to set aside the award and also held that if the arbitral award is so unfair and unreasonable that it shocks conscience of the Court, same can be interfered.

(iii) In the case of DDA Vs. R.S. Sharma and Co. reported in (2008) 13 SCC 80, it was held that an award can be interfered with by the Court under Section 34 of the Act when it is contrary to:-

(a) substantive provisions of law; or

(b) provisions of the 1996 Act; or

(c) against the terms of the respective contract; or

(d) patently illegal; or

(e) prejudicial to the rights of the parties.

(iv) in the case of ONGC Ltd. Vs. Wester Geco International Ltd. reported in (2014) 9 SCC 263, while expanding the Fundamental Policy of India, the

(12 of 16) [CMA-971/2017]

Supreme Court observed that the award of arbitral tribunal is open to challenge when the Arbitrator fail to draw an inference which ought to be drawn or if they had drawn an inference which on the face of it is untenable resulting in miscarriage of justice. The Court has power to modify the offending part of the award in case it is severable from the rest.

(v) in the case of Associate Builders Vs. DDA reported in (2015) 3 SCC 49, the Hon'ble Supreme Court comprehensively dealt with the scope of Section 34 and have propounded that lack of judicial approach, violation of principles of natural justice, perversity and patent illegality are identified grounds for interference with an award of Arbitrator. Further, following restrictions on exercise of powers of Court under Section 34 have also been propounded:-

(a) The Court under Section 34 (2) of the Act, does not act as a Court of appeal while applying the ground of "public policy" to an arbitral award and consequently errors of fact cannot be corrected.

(b) A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the sole judge of the quantity and quality of the evidence.

(c) Insufficiently of evidence cannot be a ground for interference by the court. Re- examination of the facts to find out whether a different decision can be arrived at is impermissible under Section 34 (2) of the Act.

(d) An award can be set aside only if it shocks the conscience of the court.

(e) Illegality must go to the root of the matter and cannot be of a trivial nature for interference by a court. A reasonable construction of the terms of the contract by the arbitrator cannot be interfered with by the court. Error of construction is within the jurisdiction of the arbitrator. Hence, no interference is warranted.

(f) If there are two possible interpretations of the terms of the contract, the arbitrator's interpretation has to be accepted and the court under Section 34 cannot substitute its opinion over the arbitrator's view.

(vii) In the case of Madhya Pradesh Power General Company Ltd. & Anr. Vs. Ansaldo Energia SPA and Anr. reported in (2018) 16 SCC 661, the Hon'ble Supreme Court discussed "Public Policy" under Section 34 of the Act and reiterated the principles of law for interference

(13 of 16) [CMA-971/2017]

with the arbitral award under Section 34 as enunciated in the above judgments.

19. The Hon'ble Supreme Court in Delhi Airport Metro

Express Private Limited Vs. Delhi Metro Rail Corporation

Limited [(2022)1 SCC 131], in paras 22 and 31 had examined

the scope of interference in the award and what amount to patent

illegality. It was also held that merely a plausible view or even

erroneous application of law would not entail interference with the

award under Section 34(2A) of the A&C Act of 1996. It was held

that "there is disturbing tendency of courts of setting aside

arbitral awards, after dissecting and reassessing factual aspects

of the cases to come to a conclusion that the award needs

intervention and thereafter dubbing the award to be vitiated by

either perversity or patent illegality, apart from the other grounds

available for annulment of the award. This approach would lead to

corrosion of the object of the A&C Act, 1996 and the endeavours

made to preserve this object, which is minimal judicial

interference with arbitral awards. That apart, several judicial

pronouncements of the Supreme Court would become a dead

letter if arbitral awards are set aside by categorising them as

perverse or patently illegal without appreciating the contours of

the said expression."

It was further held in para 22 as under:-

"One of the Principal objectives of the A&C Act, 1996 is to minimise the supervisory role of courts in the arbitral process. With respect to Part I of the A&C Act, 1996, Section 5 imposes a bar on intervention by a judicial authority except where provided for, notwithstanding anything contained in any other law for the time being in force. An application for setting aside an arbitral award can only be made in accordance with provisions of Section 34 of the A&C Act, 1996."

(14 of 16) [CMA-971/2017]

In para 31 it was observed that:-

"Contravention of a statute not linked to public policy or public interest cannot be a ground to set at naught an arbitral award as being discordant with the fundamental policy of Indian law and neither can it be brought within the confined of "patent illegality" as discussed above. In other words, contravention of a statute only if it is linked to public policy or public interest is cause for setting aside the award as being at odds with the fundamental policy of Indian law. If an arbitral award shocks the conscience of the court, it can be set aside as being in conflict with the most basic notions of justice. The ground of morality in this context has been interpreted by the Supreme Court to encompass award involving elements of sexual morality, such as prostitution, or awards seeking to validate agreements which are not illegal but would not be enforced given the prevailing mores of the day."

20. The arbitral award on perusal shows that the same has been

passed after detailed enquiry and sufficient reasons have been

assigned for passing the award.

21. A perusal of the material available on record indicates that

when the claimant firm challenged the order of forfeiture of

security deposit by way of writ petition, Railways took the defence

of availability of alternative remedy of Arbitration proceedings and

the writ petition was dismissed. The order of dismissal of writ

petition was upheld by the Division Bench as well as by the Apex

Court. Thereafter the claimant requested Railways for

appointment of Arbitrator on 4-4-1996 and 23-9-2002, but no

heed was paid, then the claimant moved application under

Section 11(6) of the Act of 1996 and the Sole Arbitrator was

appointed in view of the fact that earlier in writ petition filed by

claimant Railways argued for alternative remedy of arbitration

proceedings. But on requests of claimant firm Railways did not

appoint any Arbitrator. Before the Arbitrator Railways argued

(15 of 16) [CMA-971/2017]

against appointment of Arbitrator, the Arbitrator framing two

issues considered the case and turned down the defence of

Railways. The defence of Railways regarding deficit material

supplied and of inferior quality the Arbitrator found that all

payments of supplied material were made after checking and that

the re-evaluation of the supplied material allegedly conducted by

vigilance team and by Mr. K.D. Ralh were without any notice to

claimant firms and in absence of their representative, which fact

was proved by the notice dated 9/10-12-1993 (Ex.C-4) and letter

written by Mr.K.D.Ralh dated 14-2-1994 (Ex.C-6) stating that re-

evaluation was conducted by him from 10-11-1993 to 10-12-

1993. Further the necessity of re-evaluation of supplied material

by claimant, by the vigilance team and by Mr.K.D. Ralh that too in

absence of claimant was disclosed by Railways nor any enquiry

proceedings against defaulting employees was proved before the

Arbitrator. Similarly, the argument regarding clause 63 of the

GCC, the Arbitrator observed that since Railways did not act in

accordance with clause 45 of the GCC it cannot take any shelter

of clause 63 of the GCC. Accordingly, the award impugned was

passed by the Arbitrator. Challenge to it before the Appellate

court under Section 34 of the Act of 1996, the Appellate court in

view of its narrow scope, found no patent illegality in the

impugned award, however, the award regarding interest and cost

has been set aside.

22. Thus taking into consideration the proposition of law and

factual matrix of the case, this court of the considered view that

no interference with the award dated 17-7-2010 can be made

within the scope of Section 34(2), (2A) and 3 of the Act of 1996.

(16 of 16) [CMA-971/2017]

The award cannot be said to be suffering from any patent

illegality. Similarly, the appellate court has not committed any

jurisdictional error in not setting aside the award.

23. The award and the order passed by the court while

modifying the award regarding change of date of interest and

setting aside the award of cost are well within the jurisdiction of

the court. The same deserve to be sustained and appeals are

liable to be dismissed.

24. Stay application and any other pending application(s), if any,

also stand(s) disposed of.

25. A copy of the order be placed in each connected file.

26. Record of matter be sent back forthwith.

(SUDESH BANSAL),J

Arn/128-133

Powered by TCPDF (www.tcpdf.org)