Arbitration Petition No. 2 of 2016 · Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-May-2025 19:30:49 IN THE HIGH COURT OF ORISSA AT CUTTACK ARBA No.20 of 2017 Along with ARBA Nos.21, 22 and 23 of 2017. (From the Judgment dated 11.10.2017 passed by the Learned District Judge, Jharsuguda in Arbitration Petition No. 2 of 2016 arising out of arbitration award dated 01.03.2016 passed by the Ld. Sole Arbitrator Retd. Justice A.S.Naidu) (In ARBA No.20 of 2017) Mahanadi Coalfields Limited & Anr. -versus- Jalaram Transport …. …. Appellant (s) Respondent (s) Advocates appeared in the case through Hybrid Mode: For Appellant (s) For Respondent (s) : : Mr. S.D. Das, Senior Advocate along with Mr.H. Mohanty, Advocate Mr. A. Patnaik, Advocate CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-28.02.2025 DATE OF JUDGMENT:-09.05.2025 Dr. S.K. Panigrahi, J. 1. These Appeals under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A&C Act”) have been filed seeking setting aside of the Judgment dated 11.20.2017 passed by the learned Page 1 of 21 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-May-2025 19:30:49 District Judge, Jharsuguda in Arbitration Petition No. 1 of 2016, Arbitration Petition No. 2 of 2016, Arbitration Petition No. 3 of 2016 and Arbitration Petition No. 4 of 2016. Since these Appeals arise from the similar questions of law and facts and involve similar contentions, the same were taken up for hearing together and are being dealt with by this common judgment and order. I. FACTUAL MATRIX OF THE CASE: 2. The present dispute arises over recovery of excess payment made to the Respondent Contractors by the Appellant. The Appellant, Mahanadi Coalfields Limited is a Central Government Public Sector Undertaking who floated tender, i.e. NIT 287 on 26.12.2002 for transportation of crushed coal from Samaleswari Open Cast Project, Coal Handling Plant, hereinafter referred to as "SOCP, CHP" to Lajkur Railway Siding No.I, II and III of Ib Valley Area, MCL. Lead (distance) mentioned in NIT-287
Legal Reasoning
was 4-5 kms. from SOCP, CHP to Railway Siding No.I & II. The Respondent Contractors were successful bidders and the Appellant entered into individual contracts with each of them. On 7.4.2003 letter of intent was issued to the Respondent Contractors. Work orders were issued on 2.6.2003. On 23.6.2003, the agreements were signed. Date of commencement of the work was 27.4.2003. Period of completion of the work was two years from the date of commencement of the work. Scheduled date of completion of the work was 26.4.2005. The Respondent Contractors executed additional quantity of work and the Page 2 of 21 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-May-2025 19:30:49 time for completion of the additional quantity of the work was extended twice till 30.4.2006. 3. Internally, without notifying the Respondent Contractors, it was found that the distances mentioned in the NIT were more than the actual distance covered by the Respondent Contractors. Therefore, the Appellants arrived at a decision to recover the excess amounts paid to the Respondent Contractors as they had allegedly covered less distance than what was specified in the Agreement. The Appellants accordingly invoked Clause 16 of the General Terms and Conditions of the Contract and made recovery of the excess payment by deducting the amounts from the running bill. 4. Aggrieved, the Respondent Contractors approached this Court vide W.P.(C) No. 6366/2006, 6367/2006, 6368/2006 and 6369/2006 apart from four other identically placed contractors also challenging the deductions so made. This Court vide its order dated 30.3.2010 was
Decision
pleased to allow the Writ Petitions and directed the present Appellants to refund the amounts deducted. 5. Further aggrieved, the Appellant Company preferred SLP No. 17482/2010, 17569/2010, 17619/2010 and 17622/2010 before the Hon’ble Supreme Court. The Hon’ble Supreme Court vide order dated 10.10.2014 disposed off the Civil Appeal No. 9711/2014 (arising out of SLP No. 17482/2010), Civil Appeal No. 9712/2014 (arising out of SLP No. 17569/2010), Civil Appeal No. 9713/2014 (arising out of SLP No. 17619/2010) and Civil Appeal No. 9714/2014 (arising out of SLP No. Page 3 of 21 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-May-2025 19:30:49 17622/2010) apart from four other identical appeals holding that this Court ought not to have interfered when there are disputed questions of facts involved. Thereafter, the Hon’ble Apex Court was pleased to appoint Ld. Single Arbitrator, Retd. Justice A. Suryanarayan Naidu to adjudicate upon the dispute between the Parties. 6. After hearing the parties, the Ld. Sole Arbitrator was pleased to pass his final award on 1.3.2016 wherein, the Ld. Sole Arbitrator was pleased to direct the Appellant Company to pay the excess amounts so recovered to the Respondent Contractors. Here, for the sake of convenience, the amount awarded in each of the ARBA’s is reproduced in a tabular form: SL. NO. ARBA NO. (Before Court) this 1. 20/2017 2. 21/2017 3. 22/2017 head Amount awarded under the “Amount Recovered along with Bank Guarantee and Security Deposit” 51,79,296/- With Interest @9% from 6.3.2006, till 1.3.2016 and interest @ 11% from the date of the award till payment is made. 22,66,061/- With Interest @9% from 6.3.2006, till 1.3.2016 and interest @ 11% from the date of the award till payment is made. 63,79,784/- With Interest @9% from 6.3.2006, till 1.3.2016 and interest @ 11% from the Amount awarded towards litigation costs 2,27,420/- 1,13,186/- 1,59,450/- Page 4 of 21 4. 23/2017 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-May-2025 19:30:49 2,25,637/- date of the award till payment is made. 55,38,551/- With Interest @9% from 6.3.2006, till 1.3.2016 and interest @ 11% from the date of the award till payment is made. 7. Aggrieved, the Appellant assailed the final award dated 1.3.2016 under Section 34 of the A&C Act in the Court of the Learned District Judge, Jharsuguda vide Arbitration Petition No. 1 of 2016, Arbitration Petition No. 2 of 2016, Arbitration Petition No. 3 of 2016 and Arbitration Petition No. 4 of 2016 respectively. Vide separate judgments all dated 11.10.2017 in Arbitration Petition No. 1 of 2016, Arbitration Petition No. 2 of 2016, Arbitration Petition No. 3 of 2016 and Arbitration Petition No. 4 of 2016, the Ld. District Judge, Jharsuguda was pleased to dismiss the same upon arriving at the conclusion that the award was not in violation of the public policy of India, did not contain any plausible fact that would shock the conscience of the court and did not have any patent illegality on the face of the record. 8. Aggrieved by the judgments dated 11.10.2017 in Arbitration Petition No. 1 of 2016, Arbitration Petition No. 2 of 2016, Arbitration Petition No. 3 of 2016 and Arbitration Petition No. 4 of 2016, the instant Appeals have been preferred. As the facts leading up to the instant Appeal have been laid down, this Court shall endeavour to summarise the contentions of the Parties and the broad grounds that have been raised Page 5 of 21 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-May-2025 19:30:49 to seek the exercise of this Court’s limited jurisdiction available under S. 37 of the A&C Act. II. APPELLANT’S SUBMISSIONS: 9. The Ld. Counsel for the Appellant assails the arbitral award and the judgment of the learned District Judge, mainly on the ground that the learned District Judge has completely failed to deal with or cogently answer the grounds raised by the present appellant in its application under Section 34 of the A & C Act, 1996, challenging the Award dated 1.3.2016, passed by the Learned Sole Arbitrator, and has disposed of the matter in a cursory, casual and lackadaisical manner with complete non-application of mind contrary to the well settled propositions of law and, hence, both the impugned order and the Final Award are liable to be set aside. 10. It is also contended that the Ld. District Judge being the final court on facts did not take into account the alleged errors in facts that had been committed by the Ld. Arbitrator and therefore by allegedly relying on the erroneous findings of the Ld. Arbitrator, the Ld. District Judge has committed gross illegality and such a judgment is liable to be interfered with and set aside. III. RESPONDENT’S SUBMISSIONS: 11. Per contra, Learned Counsels for the present Respondent contends that the Appellant has not been able to showcase any reasonable ground for interfering with the impugned judgment apart from making bald statements towards the same. It was vehemently submitted that the Page 6 of 21 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-May-2025 19:30:49 scope of interference of this Court in an application u/s Section 37 of the A&C Act is extremely limited and this Court cannot reappreciate evidence at this stage, therefore it may not revisit the factual findings of the Ld. Tribunal apart from testing the same on the mantle of reasonableness. It was also submitted that the Ld. District Judge had considered all the material aspects of the contentions raised by the parties and also duly regarded their submissions thereby warranting no interference with the concurrent views of the Ld. Arbitral Tribunal as well as the Ld. District Judge. 12. It is submitted that the award is based on appreciation of the material and evidence that were placed before the arbitrator and it is not open in these proceedings to re-appraise the same. It is thus prayed that the present appeal be dismissed. IV. ISSUES FOR CONSIDERATION 13. Having heard the parties and perused the materials available on record, this court here has identified the following issues to be determined: A. Whether this Court should interfere with the impugned order given the narrow scope of its powers under Section 37 of the A&C Act? V. ISSUE A: WHETHER THIS COURT SHOULD INTERFERE WITH THE IMPUGNED ORDER GIVEN THE NARROW SCOPE OF ITS POWERS UNDER SECTION 37 OF THE A&C ACT? 14. It is trite in law that whilst exercising power under Section 34 of the 1996 Act the Court does not sit in appeal over the arbitral award. Page 7 of 21 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-May-2025 19:30:49 Interference with an arbitral award is only on limited grounds as set out in Section 34 of the 1996 Act. A possible view by the arbitrator on facts is to be respected as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon. It is only when an arbitral award could be categorized as perverse, that on an error of fact an arbitral award may be set aside. Further, a mere erroneous application of the law or wrong appreciation of evidence by itself is not a ground to set aside an award as is clear from the provisions of subsection (2-A) of Section 34 of the 1996 Act. 15. In Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd.1, a three-Judge Bench of the Hon’ble Supreme Court held that Courts need to be cognizant of the fact that arbitral awards are not to be interfered with in a casual and cavalier manner, unless the court concludes that the perversity of the award goes to the root of the matter and there is no possibility of an alternative interpretation that may sustain the arbitral award. It was observed that jurisdiction under Section 34 cannot be equated with the normal appellate jurisdiction. Rather, the approach ought to be to respect the finality of the arbitral award as well as party’s autonomy to get their dispute adjudicated by an alternative forum as provided under the law. 16. It is also a settled proposition that errors of fact cannot be corrected by the court while exercising the jurisdiction under Section 34 of the A&C 1 (2019) 20 SCC 1 Page 8 of 21 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 15-May-2025 19:30:49 Act as it does not sit in appeal over the award. In Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd.2, it was further inter alia held that a possible view by the Arbitrator on facts has necessarily to pass muster as the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. It was further observed that thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Reliance can also be placed upon NHAI v. ITD Cementation (India) Ltd.3, and SAIL v. Gupta Brother Steel Tubes Ltd.4. The view was reiterated in Dyna Technologies (P) Ltd. (supra) wherein it was inter alia held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. It was reminded that the court should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such an award portrays perversity unpardonable under Section 34 of the A&C Act. In South East Asia Marine Engg. & Constructions Ltd. [SEAMAC Limited] v. Oil India Ltd.5 , it was inter alia held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of the contract exists.