Hon'ble Dr. Satish Chandra, J.
(Per: Tarun Agarwala,J.) The appellants issued a tender for construction of residential quarters at Munderwa District. The value of the contract was Rs.58,59,818.42. The opposite party gave his tender, which was accepted and a contract was executed. The contract was required to be completed within 12 months.
It is alleged that the claimant started the work, but, within three months the appellants issued a notice terminating the contract. The opposite party issued a notice dated 18.4.1994 claiming an amount of Rs.34,96,259.84 and asked the appellants to appoint an Arbitrator under the contract. The appellants, in accordance with the provision of Clause 34 of the contract, appointed a sole arbitrator, who entered into the reference and gave an award dated 15.7.1997 awarding a sum of Rs.11,05,981/- under various heads along with pendentilite interest @12% per annum from 1.3.1992 to the date of award and the future interest @ 6% per month till the date of payment of decree, which ever was earlier.
The opposite party, upon receipt of the award, filed an application under Section 17 of the Arbitration Act, 1940, (hereinafter referred to as the "Act") for making the award a Rule of the Court. The said application was numbered as Misc. Case No.128 of 1997. The Court below issued notice to the appellant, which was served on 4.10.1997. The appellants thereafter filed an application purporting to be an application for setting aside the award under Section 30 of the Act, which was numbered as 10-Ga-2 in Misc. Case. No.128 of 1997, praying that the award given by the arbitrator should be set aside. Subsequently, the said application of the appellants was separately registered as Misc. Case No.23 of 2000.
The appellants' application under Section 30 of the Act as well as the opposite parties application under Section 17 of the Act was decided together. The Court below, by the order dated 12.2.2001, rejected the application of the appellants for setting aside the award and made the award the Rule of the Court. The appellants, being aggrieved by the rejection of their application, has filed the present appeal under Section 39 of the said Act praying that the order dated 12.2.2001 passed by the Civil Judge, Senior Division, Basti in Misc. Case No.23 of 2000, be set aside and that the order making the award the Rule of the Court be also set aside.
In this background, we have heard Dr.Y.K. Srivastava, the learned counsel for the appellants and Sri H.N.Singh, the learned senior for the respondents.
The learned counsel for the appellants contended that the application of the appellants for setting aside the award was rejected by the Court below on the ground that it was barred by limitation, which is wholly incorrect and perverse and, consequently, the impugned order could not be sustained and was liable to be quashed. In this regard, the learned counsel placed reliance upon the provisions of Section 14(2) and Article 119-(b) of the Limitation Act.
Section 14(2) of the Arbitration Act, 1940 contemplates that the Arbitrator is required to file the award in a Court and the Court shall thereupon give notice to the parties for the filing of the award. It is, therefore, clear that the Court is required to give notice to the parties with regard to the filing of the award and the period of Limitation would start from the date when the notice is served upon a party. Article 119(b) of the Limitation Act indicates the period within which the validity of the award could be challenged after the award is filed in the Court. The said provision prescribes the period of limitation of 30 days for making an application after the required notice regarding filing of the award of the Court is given to the parties. In the light of these provisions, we find that the award was made by the Arbitrator on 15.7.1997. Notice was sent by the Court to the appellants and was served on 4.10.1997. The appellants filed objection for setting aside the award under Section 30 of the Act on 1.11.1997. The said objection was filed within 30 days from the date of service upon the appellants. We are, therefore, of the opinion that the application filed by the appellants was within the period of limitation.
Similar view was held by the Supreme Court in Secretary to Government of Karnataka and another vs. V. Harishbabu, AIR 1996 SC 3421, Indian Rayon Corporation. Ltd. vs. Raunaq and Company Pvt. Ltd., AIR 1988 SC 2054 and in Bharat Coking Coal Ltd. vs. L.K.Ahuja, 2004(5)SCC 109. Consequently, the Court below was not justified in holding that the application of the appellants for setting aside the award was barred by limitation. This finding is incorrect.
We are, however, of the opinion that on the basis of this finding the order of the lower court cannot be set aside inasmuch as we find that the application of the appellants was also considered on merits and that, the court below in passing, also held that the application was barred by limitation. Consequently, the learned counsel for the appellants was urged to argue on merits, though the learned counsel was insisting that once a finding on this issue is in favour of the appellants, the matter is necessarily has to be remanded to the Court below for a fresh decision. We are, however, not impressed by this submission as we found that the court below has considered the objection on merits.
The learned counsel for the appellants, consequently, contended that the Arbitrator had misconducted himself inasmuch as the claim filed by the opposite party was beyond the scope and jurisdiction of the Arbitrator and that no fresh claim could be included in the statement of claim which was neither in existence nor was referred to the Arbitrator for adjudication. The learned counsel contended that the Arbitrator travelled beyond the terms of the contract and, consequently, the opposite party was not entitled to the amount claimed. It was also urged that the claimants filed photostat copies of various documents, which was not admissible. In support of his submissions, the learned counsel placed reliance upon the decisions of Associated Engineering Co. vs. Government of Andhra Pradesh and another, AIR 1992 SC 232, Santokh Singh Arora vs. Union of India and others, AIR 1992 SC 1809, K. P. Poulose vs. State of Kerala & another, AIR 1975 SC 1259, Indian Minerals Co. vs. Northern India Lime Marketing Association, 1958 AIR(All) 692, K.V. George vs. The Secretary to Govt. Water and Power Department, Trivandrum and another, AIR 1990 SC 53, Bharat Coking Coal Ltd. vs. M/s Annapurna Construction, AIR 2003 SC 3660 and Smt. J.Yashoda vs. Smt. K. Shobha Rani, AIR 2007 SC 1721.
The learned counsel submitted that the Arbitrator could not act arbitrarily, irrationally, capriciously or independently of the contract and that the sole function of the Arbitrator was to arbitrate in terms of the contract, which he has not done. Instead, he has travelled beyond the terms of the contract, which was wholly illegal and without jurisdiction.
Having heard the learned counsel for the parties, it is clear, that an Arbitrator who acts in manifest disregard of the contract acts without jurisdiction. His authority is derived from the contract and is governed by the Arbitration Act. If the Arbitrator decides the matter, which are excluded by the agreement, he commits a misconduct. Misconduct under Section 30(a) of the Arbitration Act,1940 does not have a connotation of a moral lapse. It comprises a legal misconduct, which is completed if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material document which throws abundant light on the controversy to help a just and fair decision. It is in this sense that the Arbitrator could misconduct the proceedings in a case. Further, an award could be set aside if it is improperly procured or is otherwise invalid. Misconduct means a legal misconduct in the judicial sense arising from some honest, erroneous, breach and neglect of duty, and responsibility on the part of Arbitrator causing miscarriage of justice.
In the light of the aforesaid principles, we have perused the impugned order and find that each and every ground taken by the appellants for setting aside the award was considered. The Court below, after considering all aspect of the matter, found that the Arbitrator had not misconducted himself. The learned counsel placed the terms and conditions of the contract to show that the Arbitrator had travelled beyond the terms and conditions of the contract. On the other hand, we find that the Arbitrator has given his finding on each individual item of dispute while making the award. It is not a case where a new dispute was raised, which was outside the terms of the contract. No document has been brought on record to indicate that the Arbitrator had acted irrationally or had travelled outside the terms of the contract and, therefore, its award was without jurisdiction.
The learned counsel contended that photo copies of certain documents were filed, which were considered by the Arbitrator, which was not permissible and, therefore, the award to that extent was liable to be set aside. From a perusal of the record, we find that merely by contending that since photo copies were filed, the award become incorrect and erroneous is misconceived. Something further is required to be stated by the appellants, namely, that the photo copies were not admissible in evidence as they were not compared with the original or that the photo copies were tampered. In the absence of these allegations, it is not permissible for the appellants to state that photo copies were not admissible in evidence. On the other hand, we find, that in terms of Section 63 of the Evidence Act the photo copies of the documents filed by the claimant was duly attested by a notary, which is sufficient compliance of the provisions of Section 63 of the Evidence Act.
In the light of the aforesaid, we find that the application for setting aside the award was rightly rejected and the award was made a Rule of the Court. We do not find any manifest error in the award, which requires interference by the Court.
Both the appeals fail and are dismissed.
Dated:23.9.2014.
AKJ.