Raj State Mines And Minerals Ltd vs M/S Ace Construction Mines And Min ...
2022 Latest Caselaw 7522 Raj/2

                                          (1 of 10)                 [CMA-1423/2013]


       HIGH COURT OF JUDICATURE FOR RAJASTHAN
                   BENCH AT JAIPUR

            S.B. Civil Miscellaneous Appeal No. 1423/2013

Rajasthan State Mines And Minerals Ltd., Registered And
Constituted Under Companies Act, 1956, Having Registered
Office C-89, 90, Janpath, Lalkothi Scheme, Jaipur Through
Officer Incharge Sh. K.d.s. Rajawat, Deputy Manager Legal
                                                                    ----Appellant
                                     Versus
M/s. Ace Construction Mines And Minerals Co-Operative Society
Ltd., C-9, Bhagirath Colony, Chomu House, C-Scheme, Jaipur
Through President Hitesh Garg S/o Sh. M.l. Garg, Resident Of C-
9, Bhagirath Colony, Chomu House, C-Scheme, Jaipur
                                                                  ----Respondent

For Appellant(s) : Mr. R.B. Mathur, Sr. Adv. with Mr. Dheeraj Palia, Adv.

Mr. Nikhil Simlote, ADv.

For Respondent(s) : Mr. Suresh Sahni, Adv. with Mr. R.M. Sharma, Adv.

            HON'BLE MR. JUSTICE BIRENDRA KUMAR

                                 JUDGMENT

Judgment reserved on                             :                   23.11.2022

Judgment pronounced on                           :                   29.11.2022


1.   This    appeal   under       Section       37    of    the   Arbitration   and

Conciliation Act, 1996 (hereinafter referred as the Act) challenges

the correctness of order dated 04.03.2013 passed by Additional

District Judge No.8, Jaipur Metropolitan, Jaipur in Arbitration

Application No.19/2012, whereby the learned court below refused

to set aside the arbitral award dated 08.08.2009 in exercise of

powers under Section 34 of the Act.

2. The factual background of the case is that appellant-

Rajasthan State Mines and Minerals Ltd. (hereinafter referred as

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RSMML) and Rajasthan State Mineral Development Corporation

Ltd., Jaipur (hereinafter referred as RSMDCL) issued joint notice

dated 21.06.2002 inviting tenders for loading of limestone gitti

into trucks at Sanu Mines in the District of Jaisalmer and for its

transportation from mines to railway site at Jaisalmer. The tender

of respondent M/s. ACE Construction Mines and Minerals

Cooperative Society Ltd. (hereinafter referred as Co-operative

Society) was accepted and accordingly agreement dated

23.10.2003 was signed between the parties. The respondent

started the assigned work on 17.09.2002 and 20.09.2002 at the

sites of both the companies. It is worth to mention that RSMDCL

merged with RSMML in the year 2003.

3. The mechanized mining, crushing and tipper loading

operations at the mining site was disrupted on 20.09.2002 by the

then Contractor. In view of this seizure, the appellant-Company

invited urgent tenders for execution of work by manual mining

and breaking of LS boulders and its stacking in different stock-

yards. As a result whereof the lime stones were put at different

scattered places spread over 10 sq. kms. area of mines and the

respondent was compelled to lift manually the lime stone gitties

on its truck by moving to the radius of 10 kms. A three members

Committee confirmed the fact that in the changed circumstances,

when the lime stone gitties were not being crushed by crusher

rather breaking of lime stone was manually going on at different

places, it increased the distance of carrying the gitties to the

Jaisalmer Railway Siding. One further development which took

place was that the loaded trucks for transportation placed by the

respondent were to be weighed however, there was no weighing

machine of the appellant Company at the work site for the

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referred period. Hence, the respondent was forced to get the

weighing done at a private weigh bridge which was non en-route,

further raising extra distance of 6.6 kms. The respondent raised

the bill for extra work but the appellant did not pay heed.

Thereafter, the respondent approached this Court under Section

11 (6) of the Act for the appointment of an Arbitrator, as terms of

the contract also provided for arbitration of the contractual dispute

as a mode of redressal of the grievance. The Rajasthan High Court

in S.B. Civil Arbitration Application No.06/2006 issued notice to

the appellant who was respondent therein and after hearing the

parties and considering the objections of the appellant, directed by

order dated 26.7.2006 for appointment of an Arbitrator, for

resolution of dispute raised by the respondent.

4. The learned Arbitrator framed different issues for

consideration and after hearing the parties and considering the

evidence brought on record, decided all the issues with reasoned

order. Some of the claims of the respondent were turned down

and some were allowed whereas counter claim of the appellant

was not decided as it was not a part of the reference order and

liberty was granted to the appellant to move to an appropriate

forum.

5. Issue No.1 "Whether the claim being beyond the terms of

notice inviting tender and the contract is not maintainable?" was

decided in favour of the respondent with observation that there is

nothing to suggest that the claim is beyond the terms of notice

inviting tender or the contract. This issue has not been challenged

in this appeal. Hence, it is established that the claim of the

contractor was not beyond the tender and contract between the

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parties. Hence, other disputed questions does not leave any scope

for interference under Section 34 of the Act.

6. What the appellant has challenged herein is finding in

respect of issue No.2 "Whether the claimant-Society is entitled for

the remuneration for executing the additional work of

transportation of lime stone gitties loaded manually into tippers

from several scattered manual gitti pits located within a radius of

approximately 10 sq. kms. area for the period October 2002 to

June 2003?" and issue No.3 "Whether the claimant-Society is

entitled for the payment of extra lead of 6.6. kms wheeled out, on

account of weighing of multi exle trollas at a higher capacity

weighbridge which was not en-route from the loading to the

unloading point for the period January, 2003 to August, 2004?"

Both the issues were decided in favour of the respondents

considering the material on record.

7. Mr. R.B. Mathur, learned Senior Counsel appearing for the

appellant contends that the Arbitrator travelled beyond the

agreement and the reference, as such the award is vitiated by

arbitrariness. Learned counsel next contends that refusal to decide

the counter-claim in spite of over-whelming evidence before the

Arbitrator suffers from arbitrariness and as such the award was fit

to be set aside and the learned court below has not considered the

serious infirmities in the award. Learned counsel for the appellant

has placed reliance on the following judgments:-

(1) Oil and Natural Gas Corporation Ltd. Vs. SAW PIPES Ltd. reported in (2003) 5 SCC 705.

(2) Food Corporation of India Ltd. Vs. Chandu Construction and Anr. reported in (2007) (4) SCC

697. (3) Delhi Development Authority Vs. R.S. Sharma reported in (2008) 13 SCC 80.

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(4) Oil and Natural Gas Corporation Ltd. Vs. Western Geco International Ltd. Reported in (2014) 9 SCC

263. (5) Patel Engineering Ltd. Vs. North Eastern Electric Power Corporation Ltd. reported in (2020) 7 SCC 167.

(6) Dyna Technologies Private Ltd. Vs. Crompton Greaves Ltd. reported in (2019) 20 SCC 1.

(7) Ssangyong Engineering and construction company Ltd. Vs. National Highways Authority of India (NHAI) reported in (2019) 15 SCC 131.

(8) Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49.

8. To the contrary, Mr. Suresh Sahni learned counsel for the

respondent contends that there is no dispute regarding legal

propositions decided in the cases relied upon by the learned

Senior counsel for the appellant however, the case on hand is not

covered by the grounds mentioned in Section 34 of the Act on the

basis whereof the arbitral award can be interfered with. Learned

counsel has placed reliance on Associate Builders Vs. Delhi

Development Authority reported in (2015) 3 SCC 49.

9. The question for determination is whether the award is

against the terms and conditions of agreement between the

parties rather contrary to the agreement and reference?

10. The law is well settled that the court while considering

challenge to arbitral award under Section 34 of the Act does not

sit in appeal over the findings and decisions of the Arbitrator. The

umpire is legitimately entitled to take a view which he holds to be

the correct one, after considering the material before him and

after interpreting the provisions of the agreement. If he does so,

the decision of the Umpire has to be accepted as final and binding,

however, the award can be interfered with if the grounds

enumerated in sub-Section (2) of Section 34 of the Act is made

out. Here the challenge is on the ground that the arbitral award is

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in conflict with the "public policy of India", a ground mentioned in

Section 34 (2) (b) (ii) of the Act. In para-31 of the judgment in

ONGC Vs. SAW Pipes (supra) the Hon'ble Supreme Court stated as

follows:-

"Therefore, in our view, the phrase 'Public Policy of India' used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term 'public policy' in Renusagar's case (supra), it is required to be held that the award could be set aside if it is patently illegal. Result would be - award could 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, or

(d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court. Such award is opposed to public policy and is required to be adjudged void.

11. In ONGC Vs. Western GECO (supra), the Hon'ble Supreme

Court assigned three other distinct and fundamental juristic

principles which may be understood as part and parcel of

fundamental policy of Indian Law and held as under:-

"What then would constitute the 'Fundamental policy of Indian Law' is the question. The decision in Saw Pipes Ltd. (supra) does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Without meaning to exhaustively enumerate the purport of the expression "Fundamental Policy of Indian Law", we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the Fundamental Policy of Indian law. The first and foremost is the principle that in every determination whether by a Court or other authority that affects the rights of a citizen or leads to any civil consequences, the Court or authority

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concerned is bound to adopt what is in legal parlance called a 'judicial approach' in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the Court or the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be remembered is that the importance of Judicial approach in judicial and quasi judicial determination lies in the fact so long as the Court, Tribunal or the authority exercising powers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bonafide and deals with the subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against flaws and faults that can render the decision of a Court, Tribunal or Authority vulnerable to challenge. In Ridge v. Baldwin [1963 2 All ER 66], the House of Lords was considering the question whether a Watch Committee in exercising its authority under Section 191 of the Municipal Corporations Act, 1882 was required to act judicially. The majority decision was that it had to act judicially and since the order of dismissal was passed without furnishing to the appellant a specific charge, it was a nullity. Dealing with the appellant's contention that the Watch Committee had to act judicially, Lord Reid relied upon the following observations made by Atkin L.J. in [1924] 1 KB at pp. 206,207:

"Wherever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, act in excess of their legal authority, they are subject to the controlling jurisdiction of the King's Bench Division exercised in these writs."

12. In the case of PSA SICAL Terminals Pvt. Ltd. Vs. Board

of Trustees of V.O. Chidambranar Port Trust Tuticorin &

Ors. reported AIR 2021 SC 4661, the Hon'ble Supreme Court

summarised the law as follows:-

"42. It will thus appear to be a more than settled legal position, that in an application under Section 34, the court is not expected to act as an appellate court and reappreciate the evidence. The scope of interference would be limited to grounds provided under Section 34 of the Arbitration Act. The interference would be so warranted when the award is in violation of "public policy of India", which has been held to mean "the fundamental policy of Indian law". A judicial intervention on account of interfering on the merits of the award would not be permissible. However, the principles of natural justice as contained in Section 18 and 34(2)(a)(iii) of the Arbitration

(8 of 10) [CMA-1423/2013]

Act would continue to be the grounds of challenge of an award. The ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". It is only such arbitral awards that shock the conscience of the court, that can be set aside on the said ground. An award would be set aside on the ground of patent illegality appearing on the face of the award and as such, which goes to the roots of the matter.

However, an illegality with regard to a mere erroneous application of law would not be a ground for interference. Equally, reappreciation of evidence would not be permissible on the ground of patent illegality appearing on the face of the award.

43. A decision which is perverse, though would not be a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. However, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.

44. To understand the test of perversity, it will also be appropriate to refer to paragraph 31 and 32 from the judgment of this Court in Associate Builders (supra), which read thus:

"31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where:

(i) a finding is based on no evidence, or

(ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or

(iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse.

32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officer cum Assessing Authority v. Gopi Nath & Sons [1992 Supp (2) SCC 312], it was held: (SCC p. 317, para 7) "7. ... It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law." In Kuldeep Singh v. Commr. of Police [(1999) 2 SCC 10: 1999 SCC (L&S) 429], it was held: (SCC p. 14, para 10) "10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with."

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13. In the case on hand, the tender document S-1.3 stipulates

that the weighment of each truck while transporting the material

from mines, shall have to be got done by the cooperative society

at the companies weighbridge at the mines. No charges shall be

charged by the Company for weighment at the mines. In case the

Company's weighbridge is out of order at any time, weighment will

have to be got done at specified public weighbridge at the cost of

the Company.

14. The pleadings and evidences of the parties depict that

during the referred period weighbridge of the appellant-company

was non functional. However, it was made functional after the

period of claim of the respondent. In the circumstance, the

respondent-claimant was entitled for weighing charges from the

appellant which has been awarded by the Arbitrator. Therefore,

the award on this count is not inconsistent with the terms of

agreement between the parties. Likewise, there is clause S-1.4

that it shall be the responsibility of the cooperative society to

ensure that transportation/off-take from the crushers which may

be running approx. 18/20 hours a day except under break down is

timely and regular so that crusher hoppers are not choked.

Therefore, the parties were conscious at the time of agreement

that a crusher machine was functioning at the mines site and

limestone gittis were to be lifted from the crusher machine only.

On failure of crusher machine, the respondent was compelled to

lift gittis from different scattered places spread over 10 sq. kms.

area of mines. As such, the learned Arbitrator has not acted

arbitrarily and capriciously in making of the award.

15. Since the counter claim of the appellant was not raised

before the High Court at the time of appointment of the Arbitrator,

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the same could not be referred for Arbitration. If the Arbitrator

would have decided the counter claim, the aggrieved party could

have raised objection for setting aside the award on the ground of

award being beyond reference of dispute. Therefore, the Arbitrator

has not committed any wrong on this count also.

As noticed above, no other ground for interference with the

award is there nor raised herein.

16. On consideration of totality of facts and circumstances of the

case, this court is of the firm view that no case for interference

with the award is made out as per the requirements of Section 34

of the Act. Therefore, the court below has correctly refused to

interfere with the award.

17. Accordingly, this appeal stands dismissed as devoid of any

merit.

(BIRENDRA KUMAR),J

BM Gandhi/60

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