Central Coalfields Limited, a Body incorporated and registered under the Companies Act, 1956, a v. M/s. Md. Izrail, a Partnership Firm, having its office at Jhirki, P.O. – Suran
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI Arbitration Appeal No.23 of 2011 Central Coalfields Limited, a Body incorporated and registered under the Companies Act, 1956, a Subsidiary Company of Coal India Limited having its Registered office at Darbhanga House, P.O. – Darbhanga House, P.S. – Kotwali, District – Ranchi … … Opposite party/Petitioner / Appellant Versus M/s. Md. Izrail, a Partnership Firm, having its office at Jhirki, P.O. – Suran, P.S. – Gomia, District – Bokaro, through one o its Partners Md. Izrail. … … Claimant/ Opposite Party/ Respondent --- CORAM: HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY For the Appellant For the Respondent --- : Mr. A.K. Mehta, Advocate : Mr. Manish Kumar, Advocate : Mr. A.K. Sahani, Advocate --- 13/19.06.2023 Heard Mr. A.K. Mehta, learned counsel appearing on behalf of the appellant along with Mr. Manish Kumar, Advocate. 2. Heard Mr. A.K. Sahani, learned counsel appearing on behalf of the respondent. 3. This appeal is directed against the order dated 01.08.2011 passed by learned Subordinate Judge - I, Bermo, at Tenughat in Arbitration Miscellaneous Case No.02 of 2008 whereby the objection filed by the appellant under Section 34 read with Section 16 (6) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the aforesaid Act of 1996) has been rejected. It is not in dispute that the arbitral award was passed by the learned sole Arbitrator on 10.09.2007, who was appointed as an Arbitrator by virtue of order dated 20.09.2004 under Section 11 (6) of the aforesaid Act of 1996 in A.A. No.31 of 2004. 4. The dispute arose on account of bilateral transport contract entered into between the parties. It further appears that certain objections were raised under Section 16 of the aforesaid Act of 1996 which was rejected by the learned Arbitrator vide order dated 26.11.2005. Thereafter, the parties participated in the proceedings which concluded on 25.04.2007. 5. It was the specific case of the claimant that the claimant had transported a quantity of 12,87,921 MT whereas the CCL agreed to pay only for 8,89,238 MT and payment of the remaining was denied. 2 The claims raised by the claimant have been recorded in para 19 of the award which was duly opposed by the CCL. The learned
Legal Reasoning
Arbitrator after dealing with the facts and background of the case dealt with the claim from para 28 onwards. The learned Arbitrator recorded that all the quantities transported and shown at different places in the proceedings composed of two components, A and B- ‘A’ was the exact weightometer record and ‘B’ was separately measured quantity during breakdown of weightometer. The parties also filed their written arguments before the learned Arbitrator on 25.04.2007 and thereafter, the learned Arbitrator sought clarification from both the parties. It has been recorded in para 40 that CCL went on asking for more and more time for furnishing their reply and ultimately, the award was passed. The learned arbitrator recorded specific finding at para 47, 48 and 49 which are quoted as under: in for weighment, “47. The contract in question was for the contractor to transport the rejects whether through weightometer or by direct loading of the trucks and unloading the same at locations in manner determined by the respondents. It was for the Respondents to get the trucks weighed to mutual satisfaction of the claimants and the Respondents. No method the event of weightometer being out of order, as incorporated in the agreement of contract which was binding on both the parties, was apparently adopted as a regular feature of contract management. However, there is evidence of CCL having got some loads weighed in weighbridge. This was indeed a conscious breach of contract by the Respondents. The method of reconciling the actual quantities appears to me to be arbitrary and without basis. 48. In the records referred to under paras 43 – 47, an arbitrary norm of 9 tonnes per trip has been adopted for computing the reject quantities whenever the weightometer was down. In two cases however, it was 10 tonnes per trip. The factual position is that weightment in weigh bridges, whether made at the instance of the claimants or on the initiative of CCL as apparent from challans of the weigh bridges, referred to at para 42.5 Lot E. It is observed that no trip has weighed less than 10.5. tonnes to 11 tonnes. 49. I see no reason why the claimants should have been paid at less than 10 tonnes, when they have themselves said that they would be content with Respondent deciding to pay @ 10 tonnes per trip during period of break down of weightomemter. Moreover, records filed by the claimants and cited at para 42.4 Lot D indicate that the Respondents knew that in the preceding contract (1.1.94 to 31.12.94) and also in succeeding contract (1.7.96 to 31.3.98) a norm of 10 tonnes per trip was adopted by CCL in similar situations for purpose of payment.” 6. The arbitral award was passed by citing reasons from para 50 onwards, which are quoted as under: “50. THE ARIBTRAL WARD made on afore stated reasons here under from para 51 and beyond. 3 51. For the reasons and reasoning given above, I as the Sole Arbitrator/adjudicator, overrule and annul the method adopted by the Respondents, for measuring the quantum of coal rejects transported during break down of weightometer for the entire contract period of 1.1.95 to 30.6.96. 52. I further rule that the entire measurement of reject coal transported during the period 1.1.95 to 30.6.96 be reviewed and revised on the following firm basis, conforming to agreed conditions of contract, between Md. Izrail and CCL. 53. Total quantity of coal rejects transported shall taken as being equal to quantity recorded on the weightometer plus (number of tipping truck trips made multiplied by 10 tonnes) during break down period of the weightometer) 54. The difference between total amount payable to the claimants by CCL determined by revision in accordance with the principle determined and decided at para 53 above and amount already paid will be the amount additionally payable by the Respondents to the claimants under this Arbitral Award. 55. A simple interest @ 3% per annum will be paid by the Respondents for the entire period from the date, the last payment was made to the claimants in this contract (1.1.95 to 30.6.96), on the amount becoming due under para 54 above and upto 15.9.2007, or earlier if payment is made earlier. 56. In the aforementioned paragraph 53 and 54 I have dealt with and have passed my reasoned order/award on claim at para 28.1 (amount remaining unpaid) and para 28.2 (interest on amount under para 28.1) 57. Claim no 28.3 of Rs. 10.33 lacs - interest due to delayed payment of bills, I have given some reasons at para 34 above opposing such claims. The fact remains that Md. Izrail is a regular (long term) contractor of CCL and such claims appear to be without firm basis. I therefore hereby reject this claim altogether. 58. Claim at para. 28.4 is for payment of interest on retained security deposit of Rs. 4.27 lacs by CCL. My decision is that the SD may be refunded by CCL, if not done so far. 59. Claim no. 28.5 is for payment of loss of business/profit. In my opinion and adjudication Md. Izrail is in regular and continuing business with CCL and such claims is not admissible. More over no details/evidences have been furnished to justify this claim. The claim is rejected. 60. Claim no. 28.6 seeks Rs 50000/- towards Arbitral fee cost. This claim is rejected. 61. This award will come in effect from 15.9.2007 and in no way will affect terms and conditions of the contract agreement, which have not been specially dealt in this adjudication. 7. After having held as aforesaid, the learned Arbitrator specifically recorded in para 62 that the total amount becoming due under the Arbitral Award shall be determined and firmed up on the basis of records filed by the claimant, and as discussed under the relevant paragraphs above, on or before 14.11.2007, by when the sum due as computed under para 54, 55 and 58 will be paid to the claimant by the CCL. It was also held that if the CCL failed to comply with the arbitral award by 14.11.2007, simple interest @ 10 % on the total amount as determined for payment as per para 54, 4 55 and 58 or the part amount remaining unpaid by 14.11.2007 will be additionally payable by CCL to the claimant w.e.f. 15.11.2007 up to the date on which the full payment is made. The award was published on 10.09.2007. It further appears from the records of the learned Arbitrator that a petition under Section 33 (1) (a) and (b) and Section 33 (4) of the aforesaid Act of 1996 was filed before the learned Arbitrator and after hearing the parties, learned Arbitrator corrected the award vide order dated 16.10.2007 wherein certain insignificant and small mistakes were corrected. 8. The CCL filed an application for setting aside the award in terms of Section 34 read with Section 16 (6) of the aforesaid Act of 1996. The records of the case received from the learned court below indicate that the petition under section 34 was filed on 11.01.2008. The case was numbered as Arbitration Misc. Case No.2 of 2008. 9. After filing of the petition for setting aside the arbitral award before the learned court below, the claimant had filed objection to the petition filed under section 34 by stating after the award, mutual discussions were held between the parties in presence of the learned sole Arbitrator on 27.10.2007 and the award was settled and agreed for payment of Rs.40,59,820.00 by 31.12.2007 and accordingly the dispute was put to an end. It was also stated by the claimant before the learned court below that the settlement was signed by the representative of the parties as well as the Arbitrator. 10. A copy of the settlement dated 27.10.2007 was also filed before the learned court below. It further appears that after filing of the said settlement before the learned court below vide petition dated 04.03.2008, the parties were represented before the court on various dates. However, no response was filed to the petition dated 04.03.2008 which had brought on record the so-called settlement dated 27.10.2007, said to have been arrived at between the parties after the passing of the arbitral award. 11. The learned court below after hearing the parties dismissed the petition filed under Section 34 read with Section 16 (6) of the Arbitration and Conciliation Act, 1996 by considering the grounds raised by CCL including the point of limitation, in as much as, the 5 CCL had argued before the learned court below that the claim itself was barred by limitation. The learned court below also rejected the plea of the violation of principle of natural justice and the method adopted by the learned Arbitrator regarding filing of reply to the questionnaires raised by the learned Arbitrator. In furtherance of dealing with the merit of the petition under Section 34 read with Section 16 of the Arbitration and Conciliation Act, 1996, the learned court below also recorded that the claimant had filed Annexure – 1 which showed that the award was settled between the parties in presence of the Arbitrator and representative of the parties on 27.10.2007 which also created an estoppel against the CCL to challenge the award on certain grounds mentioned in Section 34 (2) of Arbitration and Conciliation Act, 1996 and ultimately held that the petition filed under Section 34 read with Section 16 (6) of the Arbitration and Conciliation Act, 1996 was not maintainable and rejected the same. Arguments of the appellant-CCL 12. The only point advanced by the learned counsel appearing for the appellant is that the learned court below, while considering the challenge to the award under Section 34 of the Arbitration and Conciliation Act, 1996 could not have taken into account any subsequent event which had taken place after the passing of the award / rectification of the award. He has also submitted that the so- called settlement which was brought on record by the claimant before the learned court below does not find place in the records of the learned Arbitrator which has been received. 13.
Legal Reasoning
Learned counsel has submitted that the learned court below was to confine the case only with regard to the challenge of the award under Section 34 and no more. The subsequent development could not have been taken into account at all. It was essentially for the executing court to take into consideration any subsequent development or settlement, if any, entered into between the parties after passing of the award. Arguments of the Respondent -claimant 6 14. Learned counsel appearing on behalf of the respondent, on the other hand, has stated that the arbitral award was passed by referring to para 54, 55 and 58 of the award itself and the actual quantification based on the records was to be done in terms of para 62 thereof, which provided that the total amount becoming due under the arbitral award was yet to be determined and firmed up on the basis of records filed by the claimant and in view of the discussions made in the award on or before 14.11.2007 and upon computation of amount, the same was to be paid by CCL to the claimant. 15. Learned counsel submits that the parties have acted in terms of the award and had got the amount quantified and finally settled in terms of the settlement dated 27.10.2007 which was brought on record by the claimant before the learned court below vide petition dated 04.03.2008. He submits that the said petition was not even responded to by the CCL before the learned court below. 16. However, during the course of hearing, the learned counsel appearing on behalf of the respondent has also gone through the records received from the learned Arbitrator and has fairly submitted that the so-called settlement dated 27.10.2007 does not form a part of the record of the learned Arbitrator. 17. Learned counsel has also submitted that the learned court below has not only considered the subsequent settlement dated 27.10.2007, but has also rejected the petition and dealt with the case of the parties in terms of section 34 of the aforesaid Act of 1996 and therefore no ground for interference was made out. He has submitted that merely because a reference has been made to the subsequent settlement dated 27.10.2007, the same by itself is not sufficient to set aside the impugned order passed by the learned court below. 18. He has also submitted that the amount arising out of arbitral award has already been realized in the execution case and it has been received by the claimant and nothing survives in the present case. The execution proceeding has already been closed. Findings of this Court 19. The following dates are not in dispute: (a) The date of arbitral award is 10.09.2007. 7 (b) The modification or rectification of the award was done on 16.10.2007. (c) So called settlement was arrived in presence of the Arbitrator between the representatives of the parties. (d) The arbitral award was challenged vide petition dated 11.01.2008. (e) The claimant filed a petition before the learned court below dated 04.03.2008 bringing on record alleged settlement dated 27.10.2007, which was certainly after passing of the arbitral award and after the order of rectification by the learned Arbitrator. It was brought on record before the learned court below vide petition dated 04.03.2008. However, no response to the same was filed by CCL before the learned court below. 20. This Court finds that the arbitral award dated 10.09.2007 as well as the rectification order dated 16.10.2007 have been found in the records of the learned Arbitrator. The learned Arbitrator ultimately did not quantify the amount which was payable in terms of the award and it was left to be done in terms of para 62 of the arbitral award and for that the parties were to do the needful on or before 14.11.2007. 21. This Court is of the considered view that once an award /rectification of award was passed by the learned Arbitrator lastly on 16.10.2007 and when the award was challenged under Section 34 read with Section 16 (6) of the Arbitration and Conciliation Act, 1996, the jurisdiction of the learned court below was confined to examination of the award in the light of the permissible grounds of interference under Section 34 and Section 16 (6) of the aforesaid Act of 1996. 22. This Court finds that the learned court below while considering the petition under Section 34 read with section 16 (6) has rejected the challenge on merits within the limited scope under section 34 including the point of jurisdiction of the Arbitrator, and the claim itself being barred by limitation, by citing reasons. However, apart from rejecting the grounds of challenge referable to 8 section 34 read with section 16 of the Act of 1996 and raised before the learned court below, the learned court also considered the submissions of the claimant that the parties had ultimately settled their dispute finally on 27.10.2007 and held that such settlement arrived on 27.10.2007 created an estoppel on the appellant to challenge the award. 23. This Court is of the considered view that such observations made by the learned court below regarding subsequent developments which had taken place after passing of the arbitral award/rectification order could not have been considered/adjudicated upon while dealing with the petition under Section 34 of the Act of 1996. The learned court below ought to have confined its findings with regard to the grounds raised under Section 34 read with section 16 (6) of the Arbitration and Conciliation Act, 1996 and all subsequent developments, post award, were essentially within the domain of the executing court. The fact remains that the petition for setting aside the award itself was filed after the so-called settlement dated 27.10.2007 said to have been signed by the learned Arbitrator, does not find place in the records of the learned Arbitrator. 24. This Court also finds that in terms of Section 32 of the Arbitration and Conciliation Act, 1996, the mandate of the arbitrator terminates upon passing of the arbitral award and accordingly, Section 32 (3) clearly provides that subject to Section 33 and subsection 4 of Section 34, the mandate of arbitral tribunal shall terminate with the termination of the arbitral proceedings. In the present case, the mandate of the arbitral tribunal terminated upon passing of the rectification order dated 16.10.2007. 25. The settlement under Section 30 of the Act of 1996 can be arrived at during the pendency of the arbitral proceedings and if the settlement is arrived at during the pendency of the arbitral proceeding, then an award is required to be drawn in terms of the settlement by virtue of Section 30 (3). In the present case, admittedly, the settlement was not arrived at during the pendency of the arbitral proceedings before the learned Arbitrator and alleged 9 settlement had taken place after the termination of the mandate of the learned Arbitrator. 26. As rightly pointed out by the learned counsel for the respondent, the learned court below has dealt with the so-called settlement dated 27.10.2007 in addition to deciding the case on merit in the light of the ground taken under section 34 read with section 16 (6) of the Act of 1996. This Court is of the considered view that the findings recorded by the learned court below to the extent that the so- called settlement dated 27.10.2007 created an estoppel against the appellant to challenge the award dated 10.09.2007 and additional /rectified award dated 16.10.2007, is not sustainable in the eyes of law and accordingly, the portion of the impugned order which deals with the alleged settlement dated 27.10.2007 is not sustainable in the eyes of law and such portion of the impugned order is hereby set aside. Such points regarding settlement, post award, is essentially matters relating to execution of the award. So far as remaining part of the award dealing with the merit of the petition under Section 34, read with section 16(6) is concerned, no arguments have been advanced by the learned counsel for the appellant. Otherwise also, the impugned order dealing with the grounds challenging the award does not call for any interference by this Court. 27. This appeal is accordingly disposed of with the aforesaid observations. 28. Pending interlocutory application, if any, stands closed. Saurav/ (Anubha Rawat Choudhary, J.)