) ------ 1. State of Jharkhand through the Secretary, Water Resources Department, Ranchi, Nepal v. M/s Prem Kumar, Block No. 281/2/3, Road No. 9, Adityap
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI (Commercial Appellate Jurisdiction) Commercial Appeal (DB) No. 18 of 2020 (Against the judgment dated 10th January 2020 passed by District Judge-I-cum- Commercial Court, East Singhbhum, Jamshedpur in Arbitration Case No. 06 of 2019) ------ 1. State of Jharkhand through the Secretary, Water Resources Department, Ranchi, Nepal House, Doranda, Ranchi, P.O. & P.S. Doranda & District- Ranchi 2. The Executive Engineer, Waterways Division, Chaibasa, PO,PS & ...... Appellants District- West Singhbhum Versus M/s Prem Kumar, Block No. 281/2/3, Road No. 9, Adityapur, Saraikella, Kharsawan, PO & PS- Adityapur, District- Jamshedpur …... Respondent --------- PRESENT HON’BLE MR. JUSTICE SHREE CHANDRASHEKHAR HON’BLE MR. JUSTICE RATNAKER BHENGRA For the Appellants For the Respondent ------- : Mr. Ashok Kumar Yadav, Sr. SC-I : Mr. Vibhor Mayank, Advocate : Ms. Apurwa Pathak, Advocate ------- Oral Order 17th May 2023 Per, Shree Chandrashekhar,J. After its failed attempt to challenge the Award dated 18th February 2018 before the Commercial Court, East Singhbhum at Jamshedpur, the State of Jharkhand has filed the present Commercial Appeal under section 13(1-A) of the Commercial Courts Act, 2015. 2. In Arbitration Case No. 06 of 2019, the Commercial Court has held that the Award dated 18th February 2018 does not suffer from any such
Legal Reasoning
infirmity so as to set-aside the Award under section 34 of the Arbitration and Conciliation Act, 1996. 3. In the present Commercial Appeal, the State of Jharkhand has tried to demonstrate that the aforesaid finding of the Commercial Court has been rendered overlooking that the Arbitrator has committed serious errors in law in awarding interest from the date the contractor had invoked the Arbitration clause and has granted loss of profit to the tune of Rs. 5,97,234/- even though the claimant did not make such a claim. 2 Commercial Appeal (DB) No. 18 of 2020 4. An agreement in Form F2-06/2006-2007 was executed between M/s Prem Kumar and the State of Jharkhand for construction of Weir over Sona river near Sinni. The initial estimated cost of the work was Rs. 1,15,39,530/- and the time for completion of the work was six months from 17th January 2007. This is an admitted position that the claimant completed about 85% work under reference and invoked Clause 23 of the Agreement dated 17th January 2007 for resolution of the dispute between the parties. The claimant raised claims under 12 heads which included (i) release of bank guarantees (ii) security deposit deducted from the running bills (iii) hiring charge of JCB, dumper and tractor, labour charges and damages for wastage of cement, metal strips, sand chips etc. The Arbitrator framed 11 issues out of which Issue Nos. 3, 4 and 5 mainly pertained to allegation of obligations and defaults claimed by both the parties. Before the Arbitrator, the claimant examined himself as CW1 and proved the documents vide Ext.- 1 to Ext.-17. The Arbitrator has found that the claimant was asked to work below the schedule-rate and due to flood the right-side of the Weir had completely washed away and the claimant had to face objections from the villagers when he attempted to start the work. The Arbitrator has recorded that (i) there was water-logging at the site and the claimant had to undertake this work on his own; (ii) there was a delay of about 2 and ½ months on the part of the department to issue work order for concrete work; (iii) the claimant was directed to start work with the revised map in anticipation of sanction; and (iv) the revision/ modification made in the map was out of the scope of the Agreement. The Arbitrator has allowed the claims for release of bank guarantees and refund of security deposit. However, the claims of the plaintiff seeking damages and/or compensation for expenses incurred under 5 heads were partly allowed. And, the Claim Nos. 9 to 12 have been denied to the claimant. 5. The Commercial Court has taken note of the brief facts of the case, findings of the Arbitrator and scope of the interference by the Court under section 34 of the Arbitration and Conciliation Act, 1996. 6. The Presiding Officer of the Commercial Court at Jamshedpur has held as under: “10-B. Coming now to the grounds of challenge to the impugned 3 Commercial Appeal (DB) No. 18 of 2020
Legal Reasoning
award raised by the Petitioner is that the claim of the Respondent before the Learned Arbitrator was confined to payment of undisputed and admitted claim with the damage and compensation up on the opposite party/ respondent. The learned Arbitrator summed up the claim of the claimant in para 28 of the Award, consisting of altogether 12 claims. But the Ld. Arbitrator in para 82 of the Award, Awarded claim of VII Items, out of which Award no. V is loss of profit amounting to Rs 5,97,234.00 was beyond the claim as no such claim was made by the claimant in his claim application. That so far award granted in respect to item no. IV is concerned towards charges of JCB Dumpers, tractors and wages of labour is self contrary as in court of discussion of Issue no. 8 of Award in para 71, 72, and 73, it has been observed by the Ld. Arbitrator that claimant has not produced bank statements in support of said claim, but in spite of said findings learned Arbitrator granted the award of said Item no IV of the Award. That the other award of item no. 1, 11, and 111 are contrary to terms of Agreement. Further grant of award in respect to boue no. It is beyond the Arbitration proceeding as in Arbitration Proceeding there is no scope to grant any equitable relief like other suits. In this regard I find enough merit in the contention of learned counsel of the opposite party claimant is that application U/s 34 of the CPC are summary proceeding. The object of the Act which was to provide an expeditious alternative binding dispute resolution process with minimal court intervention or interference in matters relating to arbitration, and sense of urgency shown with reference to arbitration matters brought to court, requiring promptness in disposal. In the instant case the applicants have failed to bring the case within the ambit of Section 34 of the Act. Only a bald statement has been made that the award is against the public policy of India. However, no effort has been made to show as to how the award is against the pubic policy of India. The word public policy has been definest in the act itself and is said to be attracted in case where the award is induced by fraud or corruption. However from the averments made in the application it shall appear that there is no allegation of the award being induced by fraud or corruption. 10-C. In the instant case the petitioner has not even made an attempt to show as to how the award fulfills the criteria provided under section 34 of the Act. The award dated 18-02-2018 is not in any way contrary to substantive provisions of law or the provisions of Arbitration and Conciliation Act 1996. In the entire pleadings there is not a single pleading alleging therein that award is patently illegal or prejudicial to the rights of the parties. ............................................................................................................ 12. So from the above mentioned discussion of the documentary evidence and judgment of Hon'ble Apex Court and Hon'ble High Court, it is crystal clear that the award dated 18-02-2018 passed by the Learned Sole arbitrator Shri Krishna Murari, Retired District & Sessons Judge in Arbanation Case no. 06 of 2019 is a reasoned award and no need to interfere in the said award. There is no cogent reasons or material available on the record to set aside the award dated 18-02-2018 passed by the Learned Sole arbitrator Shri Krishna Murari, Retired District & Sessions Judge in Arbitration Case no 06 of 2019. 13. On the basis of oral and documentary evidences of the parties and all the faces and materials available on record this court comes to the conclusion that there is no error appear on the face of 4 Commercial Appeal (DB) No. 18 of 2020 the record or it has not come that the arbitrator has not followed the statutory legal position. There is no material available on the record which prove that the arbitrator had misconducted himself or the proceedings or the award has been improperly procured or is otherwise invalid that the court may set aside such award, so there is no required interfering with the award published by the Learned Sole arbitrator Shri Krishna Murari, Retired District & Sessions Judge in Arbitration Case no 06 of 2019 in which award passed that the claimant is entitled for payment sum of Rs. 38,10,6497 altogether with interest @ 12% per annum with effect from 18.09.2010. 14. Hence, issue no.1 "Whether the award is liable to be set aside in view of the objection? is decided in favour of Opposite party/ claimant against the applicant/ respondent. Hence, in the light. of the facts discussed above I find that Learned Sole arbitrator Shri Krishna Murari, Retired District & Sessions Judge in Arbitration Case no. 06 of 2019 has not committed any error of law or fact in passing award dated 18-02-2018 As such there is no infirmity found in the award dated 18-02-2018 passed by the Learned Sole arbitrator Shri Krishna Murari, Retired District & Sessions Judge in Arbitration Case no. 06 of 2019 and hence, the impugned award dated 18-02-2018 does not require any interference. Accordingly, find that instant suit for setting aside the arbitral award dated 18- 02-2018 passed by the Learned Sole arbitrator Shri Krishna Murari, Retired District & Sessions Judge in Arbitration Case no.06 of 2019 is devoid of merit and liable to be dismissed.....” 7. This seems to be the policy of the Legislation that there should be minimum judicial intervention with the order passed and award made by the Arbitrator and, therefore, section 5 of the Arbitration and Conciliation Act, 1996 declares that in the matters governed by Part-1 of the Act no judicial authority shall intervene except where so provided in that Part. The main foundation for making the claims was fundamental breach of contract by the employer inasmuch as the State of Jharkhand failed to provide map and work order in time and on the contrary revised the work plan; did not provide clear site for the work by acquiring lands of the raiyats and did not respond to various communications for dewatering. Under section 34 of the Arbitration and Conciliation Act, 1996, there are limited grounds to lay a challenge to the arbitral award made by the Arbitrator. A plausible view of the Arbitrator cannot be substituted by the Court on re-appreciation of the evidence and by substituting its own view of to do what it considers to be just. The proviso to sub-section (2-A) of section 34 specifically provides that the decision of the Arbitrator cannot be turned down on re-appreciation of evidence even where the Arbitrator has wrongly decided a question of law. No doubt if it appears on the face of the award that the arbitrator has 5 Commercial Appeal (DB) No. 18 of 2020 proceeded illegally or makes a serious error which is apparent on the face of the records, that is to say, admitting an inadmissible evidence or adopting a principle of construction which in law cannot be countenanced the same can be a ground for setting-aside the award. This is also by now well-settled that an award can be set-aside only on the grounds enumerated under section 34 of the Arbitration and Conciliation Act, 1996, and on no other ground. 8. In “McDermott International Inc. v. Burn Standard Co. Ltd.” (2006) 11 SCC 181 the Hon’ble Supreme Court has observed as under: “52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.” 9. In “Ravindra & Associates v. Union of India” (2010) 1 SCC 80 the Hon'ble Supreme Court approved award of claim for extra-expenses incurred by the contractor on account of the delay by the employer. The Hon'ble Supreme Court has further held that the High Court shall not interfere with the findings of fact given by the Arbitrator relating to escalation in price of the materials. In view of the established fundamental breach on the part of the employer to carry out its obligations, the Arbitrator has rightly awarded damages to the claimant. In “Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd.” (2018) 3 SCC 133 the Hon'ble Supreme Court has observed that where damages are claimed for loss caused due to termination of contract which was only partially performed the Arbitrator can adopt the principle that as far as possible the injured party should be placed in as good a situation as if the contract has been performed. The Hon'ble Supreme Court has further held that where the injured party has acted in a reasonable manner and the opinion of the Arbitrator for awarding the damages is a reasonable and plausible one, there is no question of interdicting with the arbitral award. 10. In “Navodaya Mass Entertainment Ltd. v. J.M. Combines” 6 Commercial Appeal (DB) No. 18 of 2020 (2015) 5 SCC 698 the Hon’ble Supreme Court has observed as under: “8. In our opinion, the scope of interference of the court is very limited. The court would not be justified in reappraising the material on record and substituting its own view in place of the arbitrator's view. Where there is an error apparent on the face of the record or the arbitrator has not followed the statutory legal position, then and then only it would be justified in interfering with the award published by the arbitrator. Once the arbitrator has applied his mind to the matter before him, the court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the arbitrator would prevail. [See Bharat Coking Coal Ltd. v. L.K. Ahuja, Ravindra & Associates v. Union of India, Madnani Construction Corpn. (P) Ltd.v.Union of India, Associated Construction v. Pawanhans Helicopters Ltd. And Satna Stone & Lime Co. Ltd. v. Union of India.]” 11. The power of the Arbitrator to grant interest on the sum for which the award is made has never been in doubt except for a brief period when some confusion prevailed as regards the period(s) for which interest can be awarded. This power of the Arbitrator to award interest has been recognized under sub-section (a) to section 31(7) of the Arbitration and Conciliation Act, 1996 which provides that unless otherwise agreed by the parties where and insofar as an arbitral award is for the payment of money, the Arbitrator may include the sum for which the award is made interest at such rate as it deems reasonable, on the whole or any part of the money, or for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. The expression “cause of action arose” leaves little doubt to the power of the Arbitrator to award interest from the date the arbitration clause was invoked. 12. In “Delhi Airport Metro Express (P) Ltd. v. DMRC” (2022) 9 SCC 286 the Hon'ble Supreme Court has held that in the absence of an agreement between the parties the Arbitrator would have a discretion to exercise its powers under clause (a) of sub-section (7) of section 31 and such discretion is wide enough. 13. The findings of the Arbitrator seem to be indisputable. The plea put forth by the State of Jharkhand before the Arbitrator were that there was no provision for dewatering, revision of map was within the powers of the employer and the contract was finally terminated on 25th February 2011. On appreciation of the materials on record, the Arbitrator has recorded a finding that the acquisition of land and payment of compensation to the 7 Commercial Appeal (DB) No. 18 of 2020 raiyats after the claimant was asked to complete the work are such incidents which exonerate the claimant and put the blame on the State of Jharkhand. 14. The powers under section 37 of the Arbitration and Conciliation Act, 1996 which powers the High Court shall be exercising in a petition under section 13(1-A) of the Commercial Courts Act, 2015 cannot be wider than section 34 of the Arbitration and Conciliation Act, 1996. 15. In “MMTC Ltd. v. Vedanta Ltd.” (2019) 4 SCC 163 the Hon’ble Supreme Court has observed as under: “14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.” 16. Having regard to the aforesaid facts and circumstances in the case, Commercial Appeal (DB) No. 18 of 2020 is dismissed. (Shree Chandrashekhar, J.) (Ratnaker Bhengra, J.) Jharkhand High Court, Ranchi Dated: 17th May, 2023 Sharda/S.B.-A.F.R