1. The present First Appeal has been filed by the appellantoriginal applicant under Section 37 of the Arbitration Act, 1940 (old Act) read with Order XLI of the Civil Procedure Code, 1908 challenging the impugned judgment and order passed by the City Civil & Sessions Court in Misc. Civil Application No.286 of 2001 and Misc. Civil Application No.309 of 2001 dated 24.07.2012 on the grounds stated in the memo of First Appeal contending inter alia that the judgment and orders are contrary to evidence on record and have been passed by misconstruing and reading out of the context of certain documents and depositions. It is also contended that the award is contrary to the express terms of the agreement/contract between the parties. It is contended that the learned District Judge has also failed to exercise the discretion under Section 34 of the Arbitration Act. It is contended that Section 34 of the Act provides jurisdiction to quash the award and, therefore, it has been specifically contended that the amount awarded towards the escalation is not applicable in respect of the items like steel and cement. It is also contended that the claim is contrary to and in violation of Clause 21 of condition to the agreement between the parties. It has been specifically provided that on account of delay in commencing or executing of the work whatever the cause of delays may be, the appellant shall not be liable for any claim in respect thereof.
2. Heard learned counsel, Shri Hardik Mehta for the appellant and learned counsel, Shri Unmesh Shukla appearing with learned counsel, Shri Tirthraj Pandya for the respondent.
3. Learned counsel, Shri Hardik Pandya has referred to the papers at length and paper book, which has been produced and pointedly referred to Clause 21 of the agreement and submitted that the award has been made contrary to the said clause, which specifically provides that any claim for compensation for the loss suffered on account of delay in commencing or executing the work shall not be entertained and the appellant shall not be liable for any claim in respect thereof. He, therefore, submitted that the Arbitrators have gone beyond the terms and conditions of the reference and have committed grave error in entertaining any such claim. He pointedly referred to the Claim E, which provides for 14% escalation in respect of the item like steel and cement. Learned counsel, Shri Mehta submitted that as per the terms of the contract, steel and cement was to be supplied by the appellant and, therefore, this expression would not be applicable at all, which has not been appreciated. He has also submitted that the judgment and award, which has been confirmed by the District Court by the impugned judgment and order, is erroneous and the present First Appeal may be admitted and allowed.
4. Learned counsel, Shri Mehta has referred to and relied upon various judgments including the judgment in case of Himachal Pradesh Nagar Vikas Vs. Aggarwal & Co., reported in (1997) 9 SCC 369 and submitted that facts in that case were also similar with regard to the escalation clause in respect of the items, which were to be supplied by the party. He submitted that as observed in that case also, since the iron and cement were not procured by the contractor and it was supplied, the contractor would not be entitlement for the escalation. He has also referred to and relied upon further observations made referring to the clause and interpretation of the clause in the agreement. He has also referred to and relied upon the judgment in case of M/s. M.B. Patel & Co. Vs. Oil and Natural Gas Commission, reported in AIR 2008 SC (Supp.) 290 and tried to emphasis that when the award is beyond the scope of arbitration agreement, it could be set aside. He has also referred to and relied upon the judgment of the Hon’ble Apex Court in case of Rashtriya Chemicals and Fertilizers Limited Vs. Chowgule Brothers & Ors., reported in (2010) 8 SCC 563 in support of his submission. He has strenuously submitted that when the award is contrary to the terms of the contract, the Court can set aside such order and the Arbitrator has no jurisdiction to make an award contrary to the terms of the contract between the parties. He submitted that the award itself is contrary to the terms of the contract, which has been confirmed by the Court below and, hence, same may be quashed and set aside.
5. Per contra, learned counsel, Shri Unmesh Shukla referred to the background of the facts and submitted that the contract was entered into in the year 1987; the dispute arose in the year 1989 and the agreement was signed on 01.02.1988. He submitted that the estimated cost of the agreement was Rs.72.00 lacs with stipulated time of 15 months. He submitted that when the work order was given, it was only for Rs.42.00 lacs initially and, thereafter, it was extended by a communication dated 03.03.1989 upto Rs.48.70 lacs. Similarly, he submitted that time was also extended on 30.10.1989. Learned counsel, Shri Shuka has also referred to communication dated 13.10.1989. He pointedly referred to these communications to emphasise about two aspects;
(i) The escalation at 14% on the cost of building construction above Rs.48.70 lacs; and
(ii) Extension of time.
Therefore, it was submitted that it does not lie in the mouth of the appellant now to contest and raise any dispute in the First Appeal when the order has been passed by the Arbitrator having considered all material and documents. He submitted that the Court below has therefore considered and examined the guidelines laid down by the Hon’ble Apex Court with regard to the scope of interference with the award and confirmed the said award of the Arbitrator, which cannot be said to be erroneous. Learned counsel, Shri Shuka submitted that Misc. Civil Application No.235/1999 with Appeal from Order No.503/1998 and Civil Revision Application No.272/1999 were filed and it is pursuant to the order passed by the High Court, consent term was arrived at between the parties for settling all the disputes by arbitration as per the order of the High Court (Coram : Y.B. Bhatt, J.) dated 04.11.1999. He therefore submitted that now it cannot be said that the award is beyond the scope of agreement or terms of reference as sought to be contended. Learned counsel, Shri Shukla submitted that once all the disputes are referred to the Arbitrator and two Arbitrators have examined the material and submitted report before the Court and Court having considered the application of the appellant herein under Sections 30 and 33 of the Arbitration Act passed an impugned order, which cannot be said to be erroneous. He submitted that the scope of interference in the award is also required to be examined as the Court cannot substitute its own finding unless the award is perverse. Learned counsel, Shri Shukla therefore submitted that even in Misc. Civil Application No.286/2001 filed under Sections 30 and 33 of the Arbitration Act, the appellant had not raised any contention, which is sought to be raised for the first time in the present Appeal. He submitted that therefore as the contentions, which have not been raised in a proceeding or any application under Section 30 of the Arbitration Act, it cannot be raised for the first time before the High Court. In support of his submission, he has referred to and relied upon the judgment of the Hon’ble Apex court in case of Bijendra Nath Srivastava (dead) Through Lrs. Vs. Mayank Srivastava & Ors., reported in (1994) 6 SCC 117. He has also referred to and relied upon the judgment of the Hon’ble Apex Court in case of State of Rajasthan Vs. Puri Construction Co. Ltd. & Anr., reported in (1994) 6 SCC 485. He has also referred to and relied upon the judgment of the Hon’ble Apex Court in case of Sumitomo Heavy Industries Limited Vs. Oil and Natural Gas Corporation Limited, reported in (2010) 11 SCC 296 and pointedly emphasized the observations made in Head Note – B (Para Nos.36 to 44). He has also referred to and relied upon the judgment in case of Steel Authority of India Ltd. Vs. Gupta Brothers Steel Tubes Ltd., reported in (2009) 10 SCC 63.
6. In rejoinder, learned counsel Shri Mehta again submitted that he is filing present appeal on the ground that the award is beyond the scope of the agreement or contrary to the specific terms of the agreement. He therefore submitted that the legal submission or proposition, which he is canvassing, is that nonapplication of mind and nonconsideration of the communication would be a ground for misconduct of the Arbitrator, which would permit the Court to interfere under Section 34 of the Arbitration Act. He has also referred to and relied upon the judgment of the Hon’ble Apex Court in case of Steel Authority of India Ltd. (supra) and pointedly referred to Head Note – I and submitted that the guidelines have been laid down with regard to the scope of judicial review of the award passed by the Arbitrator. He has also referred to the broad proposition or the guidelines, which have been discussed by the Hon’ble Apex Court and submitted that any error relating to the interpretation of the clause of the contract would permit the correction of the error and, therefore, the present Appeal may be admitted and allowed. Further, he has referred to and relied upon the judgment in case of K.P. Poulose Vs. State of Kerala & Anr., reported in (1975) 2 SCC 236 and referred to the observations made in Para No.6.
7. In view of these rival submissions, the moot question which is required to be considered is whether the present Appeal can be entertained or not.
8. Though normally the Appeal deserves to be admitted, before entertaining the Appeal, the Court is required to examine the proposition of law or contentions raised. Therefore, considering the background of the facts as well as the settled legal position, the rival submissions have been considered.
9. The first aspect, which has been emphasized by learned counsel, Shri Mehta for the appellant that the award is contrary to the terms and conditions of the contract or they have passed an award which is beyond the scope of reference is thoroughly misconceived. Learned counsel, Shri Mehta has not been able to point out as to how the award could be said to be beyond the scope of reference when specific order has been passed pursuant to the consent terms arrived at between the parties on the basis of the order passed by the High Court while deciding Misc. Civil Application No.235/1999 with Appeal from Order No.503/1998 and Civil Revision Application No.272/1999 vide order dated 04.11.1999. A close look at the said order makes it clear that all the disputes between the parties were permitted to be decided by the arbitrators. Further as rightly contended by learned counsel, Shri Shukla that in an application filed by the respondents, claims are specifically mentioned including the claim in respect of the escalation for the cement and steel. The correspondence particularly letter dated 21.11.1989 addressed by the appellant to the respondent clearly accepts 14% escalation towards the cost of building construction above Rs.48.70 lacs. This has been specifically included as Claim – E in the application made under Section 8 of the Arbitration Act by the respondentcontractor. Thereafter even when the application under Sections 30 and 33 of the Arbitration Act is filed by the appellant herein, the contentions have not been raised, which are sought to be canvassed here that the award is contrary to the terms of the contract or that there is no escalation provided for the steel and cement. Had this contention been referred, the Court below would have examined. In fact, the aforesaid letter and their own acceptance of the escalation at 14% towards the general cost of construction would include such claim and the contentions which are sought to be made at this stage cannot be reconsidered or evaluated on the basis of the evidence. It is well accepted that the scope of judicial review for the purpose of deciding such application under the Arbitration Act would be limited. The Hon’ble Apex Court in a judgment in case of M/s. Associated Construction Vs. Pawanhans Helicopters Pvt. Ltd., reported in AIR 2008 SC 2911 has made observations that “it must also borne in mind that a court does not sit as one in appeal over the award of the arbitrator and if the view taken by the arbitrator is permissible, no interference is called for on the premise that a different view was also possible.” Further it has also been observed in a judgment in case of M/s.Sudarsan Trading Co. Vs. The Government of Kerala & Anr., reported in AIR 1989 SC 890(1) that while examining whether the Arbitrator has acted correctly in allowing and disallowing the claim, the Court cannot substitute its own finding based on evaluation of the material. Similar view has also been expressed in a judgment in case of Food Corporation of India Vs. M/s. Veshno Rice Millers, reported in AIR 1989 SC 1163. Therefore, normally the Court would not interfere with the award and the grounds for interfering with the award of the Arbitrator setting aside the award are limited. In other words, the scope is very well laid down by the judicial pronouncements. If the Arbitrator has misconducted himself or has totally misdirected or exceeded the jurisdiction, it may call for interference with the award. However, it is also well accepted that on appreciation of evidence and the facts, even if other view is possible or plausible, the Court would not substitute its own findings. Therefore, considering the clause of the agreement between the parties and also the claim, which has been made and also the application filed by the appellant under Sections 30 and 33 of the Arbitration Act, it cannot be said to have been decided de hors the material and evidence. This Court is not required to reappreciate or scrutinize the evidence in the guise of judicial review. The Court also while accepting the award based on material and evidence accepted the same as there was no reason to discard or differ with the award on the basis of the valid legal point.
10. The submission that it was beyond the scope of arbitration or the contract or the reference has never been raised and in fact, it would not have been raised in view of the specific order of this Court as stated hereinabove and, hence, the point is required to be considered whether the Arbitrators have decided the matter on the basis of the material and evidence and whether there can be any serious error in applying the law or in appreciating the material and evidence. Even that has also not been focused before the Court below and such contentions are raised for the first time in this appeal. There was no contention raised with regard to the misconduct of the Arbitrator and if there is no such material and evidence pointed out, merely because the Arbitrators, have on the basis of the material and evidence, come to a conclusion, the same cannot be said to be erroneous and it does not call for any interference as rightly observed by the Court below. The Hon’ble Apex Court in catena of judicial pronouncements has laid down broad guidelines with regard to the approach while deciding such application challenging the award and it has been time and again observed that if the award does not suffer from any infirmity or is not perverse, approach should be normally to accept the same. Therefore unless it has been pointed out that there is a legal issue or the point which has not been considered or the approach is contrary to the law, it cannot be normally disturbed. Therefore, the submissions made by the learned counsel, Shri Mehta cannot be accepted and the impugned judgment of the Court below confirming the award of the Arbitrators does not call for any interference. No other contentions have been raised.
11. The present First Appeal therefore deserves to be dismissed in limine and accordingly stands dismissed.
12. In view of dismissal of main First Appeal, Civil Application for stay does not survive and stands disposed of accordingly.
Gautam Sd/ (RAJESH H. SHUKLA, J.)