Full Text
JUDGMENT
Through its Director Shri Punish Khanna A-24, Gulmohar Park
New Delhi-110 049 Also at:
M/s. Renaissance Aqua Sports P. Ltd.
Registered office at:
35/7, Shahbad Daulat Pur, Delhi- 110034 ….Appellant
Through: Mr. Sanjay Parikh, Mr. Anish R. Shah &
Mr. Abinash K. Mishra, Advs.
1. M/s. Hotel Marina 1407-08, Chiranjiv Tower Nehru Place, New Delhi-110 019 Through its Managing Partner.
2. Shri R.K. Mehra, Sole Arbitrator 33/78, Punjabi Bagh New Delhi-110 026 …. Respondents. Through: Mr. S.K. Maniklata & Mr. Raju K, Advs. Coram: HON'BLE MR.
JUSTICE V.B. GUPTA
1. Whether the Reporters of local papers may be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes 2010:DHC:509
3. Whether the judgment should be reported in the Digest? Yes V.B.Gupta, J. Present appeal is against judgment dated 22nd January, 2003 passed by Additional District Judge, Delhi, vide which petition of the appellant, under Section 34 of the Arbitration and Conciliation Act, 1996 (for short as „Act‟) was dismissed.
2. Brief facts are that appellant company is engaged in the business of supply, installation and commissioning of Health Club, Swimming Pools and their equipments etc. Respondent No.1, placed an order for supply and installation of certain health club equipments for their hotel at Agra. At the time of supply of first consignment the site was not ready for installation and commissioning of the equipments. The engineers and labour sent by appellant-company had to return back without doing any work.
3. On 20th April, 1999, engineers and technicians went to Agra for doing the work of installation, which was completed by appellant on 24th April, 1999. Appellant requested respondent No.1, to release the payment in respect of work done as well as the advance payment in respect of material left unsupplied, but respondent No.1 avoided the due payment to the appellant.
4. As per terms, respondent No.1 was supposed to make payment of 50% of the value as advance against bank guarantee for a period of six months, 40% at the time of delivery of goods at Agra and 10% after installation and commissioning. Respondent No.1 after release of first payment of 50% against bank guarantee for six months towards the total contract amount, did not release any payment. However, only a sum of Rs.[2] lacs was released subsequently upon great persuasion but no more payment was ever released by respondent No.1.
5. Since dispute arose between the parties, matter was referred to the Arbitrator, who passed the award dated 10th July, 2002.
6. Appellant challenged the award of the Arbitrator on various grounds namely;
(i) the award was not legal and was based upon conjunctures and surmises and was not upon the basis of submissions of the parties, documents and evidence on record;
(ii) that the arbitral award deals with the dispute that was not falling within the terms of submissions to the arbitration and the decision was on the merit beyond the scope of submissions to the arbitration;
(iii) that appellant supplied the first consignment on 3.9.1998 at the hotel site of the respondent No.1 at Agra and sent their engineers and labour and they got installed the equipment but the site was not ready for installation due to continuation of civil work at that period;
(iv) that respondent No.1 in order to mislead the arbitrator as well as the claimant‟s witness forged and fabricated the sheet of contract and submitted the same before Arbitrator and that point was duly brought to the knowledge of the arbitrator during arguments but arbitrator took it very lightly and had completely ignored;
(v) that arbitrator completely ignored the fact that as per the terms, respondent No.1 was supposed to pay 50% of the value of the project at the time of advance, 40% upon delivery of the goods and 10% upon installation and commissioning of the same. Since respondent had only made payment of 50% against the cost against bank guarantee at the time of advance and thereafter paid only two lacs after great persuation. It was respondent No.1 who had violated the terms and conditions of the contract and, thus was not entitled to claim any amount;
7. In reply, respondent No.1 raised preliminary objections against the maintainability of the objections stating that the objections were not falling under any of the provisions of Section 34 of the Act and the power of the Court are limited.
8. On merit also, the facts alleged in the grounds for setting aside were disputed stating that the award cannot be set aside on these grounds as none of these grounds constituted the ground that is contemplated under the provisions of Section 34 of the Act.
9. It is contended by learned counsel for appellant that work order dated 16th June, 1998 containing the Arbitration Clause, was not only forged, fabricated and unsigned by the appellant but the same was disputed by appellant during the proceedings before the arbitrator itself. The arbitrator without allowing the parties to lead evidence on this aspect, assumed jurisdiction in the matter and passed the impugned award and thus committed grave jurisdictional error.
10. Other contention is that the arbitrator ought to have relied upon the genuine terms and conditions of the work order dated 16th June, 1998, according to which appellant was to get 40% payment of the goods supplied at Agra Hotel.
11. Another contention is that goods were supplied and were duly received, without any objection but payment was not made as per work order dated 16th June, 1998.
12. The trial court failed to see that the approach of arbitrator in appreciating the evidence was not only perverse but also against the public policy, in as much as the claims based on the forged and fabricated bills were allowed on the basis of unsustainable presumptions.
13. Lastly, it is contended by learned counsel for the appellant that trial court wrongly applied restrictive and narrow view to arbitral mis-conduct, contrary to the view of Supreme Court in Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705, in which it was observed; “The phrase “public policy of India” is not defined under the Act. Hence, the said term is required to be given meaning in context and also considering the purpose of the section and scheme of the Act. It has been repeatedly stated by various authorities that the expression “public policy” does not admit of precise definition and may vary from generation to generation and from time to time. Therefore, in a case where the validity of award is challenged, there is no necessity of giving a narrower meaning to the term “public policy of India”. On the contrary, wider meaning is required to be given so that the “patently illegal award” passed by the Arbitral Tribunal could be set aside.”
14. On the other hand, it is contended by learned counsel for respondent that scope of Section 34 of the Act is limited. It is not open to the Court under Section 34 of the Act, to probe the mental process of the arbitrator and speculate as to what must have impelled the arbitrator to reach a particular conclusion.
15. As a general rule, the reasonableness of the reasons given in the award cannot be challenged. The award in question was passed by the arbitrator after giving full and adequate opportunity of hearing to the parties and parties led their respective evidence in detail before the arbitrator. All the issues on the factual matrixes of the case have been gone into and adjudicated by the arbitrator and the same cannot be re-agitated/reargued by the appellant in the present proceedings.
16. Appellant after taking advance from the respondent, failed to supply the goods as per terms of the contract and also failed to execute the said contract within time and thus, appellant committed breach of the terms of the contract and no fault can be found with the reasoning given by the arbitrator.
17. In support of its contention, learned counsel for respondent cited following judgments;
(i) Union of India vs. Peekay Industries,
(ii) Municipal Corporation of Delhi vs. M/s. Gupta Brothers,
(iii) Bishumdeo Narain and Anr. vs. Seogeni Rai and Jagernath,
(iv) Chagan Lal Tiwari vs. Ganga Apartments (P) Ltd. And Ors.,
(v) Rajasthan State Mines & Minerals Ltd. vs. Eastern Engineering
18. Section 34 of the Act, read as under:-
19. Supreme Court in Grid Corporation of Orissa Ltd.& Anr. V. Balasore Technical School, JT 1999(2) SC 480 observed; “The award of the Arbitrator is ordinarily final and conclusive as long as the Arbitrator has acted within its authority and according to the principle of fair play. An Arbitrator‟s adjudication is generally considered binding between the parties for he is a Tribunal selected by the parties and the power of the court to set aside the award is restricted to cases set out in Section 30 of the Arbitration Act. It is not open to the Court to speculate where no reasons are given by the Arbitrator, as to what impelled him to arrive at his conclusion. If the dispute is within the scope of the arbitration clause it is no part of the province of the court to enter into the merits of the dispute. If the award goes beyond the reference or there is an error apparent on the face of the award it would certainly be open to the court to interfere with such an award.”
20. Similarly, in Markfed Vanaspati and Allied Industries v. Union of India, JT 2007 (11) SC 141, Supreme Court observed that scope of interference is extremely limited in a non speaking award. It held;
21. In light of above principles, it is to be seen as to whether arbitrator has acted according to the principle of fair play or award goes beyond the reference and whether he has misconducted.
22. The main grievance of the appellant is with regard to work order dated 16th June,
1998. According to appellant it was not only forged, fabricated and unsigned document but the same was disputed by appellant during proceedings before arbitrator itself. The arbitrator without allowing the parties to lead evidence on this aspect, assumed jurisdiction in the matter. A grave jurisdictional error resulting in mis-carriage of justice has been committed by not rejecting the work order dated 16th June, 1998.
23. It would be relevant to quote the finding of the arbitrator, with regard to work contract dated 16th June, 1998, which reads as under; “It may also be stated that the contract, dated 16.6.1998 (Ex-P/2) is an admitted document between the parties. The entire case had proceeded on the basis of the said contract filed on record by the claimant and admitted by the respondent by filing its statement of admission and denial of documents. The entire pleadings were made and the evidence was led on the basis of the said admitted document. Even the oral submissions were addressed on the same premise. However, along with its written submissions/arguments, the respondent has placed on record, as Annexure-A thereto, a copy of another contract, also dated 16.6.1998, contending that the said document was the contract between the parties. It is pertinent to note that the claim statement was filed way back in the month of March 2000 and along with it, a copy of the said contract dated 16.6.1998 (Ex-P/2) was placed on record by the claimant. The respondent all along had notice and knowledge of the said document. If at all, there was any other document, it was incumbent upon the respondent to place the same on record at the first opportunity. Filing of the same, as “Annexure” to the written submissions, and that too without leading any evidence in respect thereof or even seeking leave to place on record such a document or lead evidence thereto, in my considered view is wholly inappropriate and impermissible. As such, the said documents cannot be looked into. It would, however, not be out of context to state here that I have compared the two documents and the only difference between two contract documents is with regard to the Terms of Payment inasmuch as in the contract (Ex-P/2), it is stated in terms of amounts that “Rs.5,85,060/- to be paid on delivery of goods at Agra” and “Rs.1,46,265/- to be paid after installation and commissioning”. On the other hand, in the contract document filed by the respondent along with its written submissions (as Annexure-A thereto), it is stated “40% on receipt of material at Agra” and “Balance 10% after installation and commissioning”. A perusal and comparison of the said clauses would show that when the total contract value is not disputed, the amount computed at 40% and 10% works out to the same figures as given in Ex-P/2. Consequently, there is no great deal of difference between the said two documents.
24. In view of the findings given by Tribunal that work order dated 16th June, 1998 is an admitted document between the parties, all contentions raised by learned counsel for the appellant thus fall to the ground. Under these circumstances, there is no material to hold that the arbitrator did not act according to principles of fair play or award goes beyond reference or the arbitrator has mis-conducted himself.
25. There is no reason to disagree with the findings given by trial court. The present appeal, under these circumstances is not maintainable and same is hereby dismissed with costs of Rs.10,000/-.
26. Appellant is directed to deposit the costs with Registrar General of this Court within one month from today, failing which Registrar General shall recover the same in accordance with law.
27. Award amount lying deposited in the fixed deposit in terms of order dated 16th January, 2004, be paid to respondent No.1, only after expiry of the period of appeal.
28. Trial court record be sent back.
29. List for compliance on 4th March, 2010. 29th January, 2010 V.B.GUPTA, J. RB