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2003(1) Supreme 956
SUPREME COURT OF INDIA
(From Calcutta High Court)
M.B. Shah, Ashok Bhan & Arun Kumar, JJ.
Food Corporation of India -Appellant
versus
Surendra, Devendra & Mahendra Transport Co. -Respondent
Civil Appeal No. 1577 of 1994
Decided on 5-2-2003
Counsel for the Parties :
For the Appellant : Y. Prabhakara Rao and K. Subba Rao, Advocates.
For the Respondent : C.S. Vadiyanathan, Sr. Advocate, P.N. Chatterjee, Sr. Advocate (in CA 1577 and 7055), K.V. Vishwanathan and Rathin Das, Advocates.
Held : Arbitration Clause XX provided that all disputes and differences arising out of or in any way touching or concerning the agreement whatsoever could be referred to the sole arbitration of a person appointed by the Managing Director except "as to any matter the decision of which is expressly provided for in the contract". Clause XII of the agreement provided that the contractor would be liable for all costs, damages, demurrages, wharfage charges and expenses etc. or transit loss suffered by the Corporation and the Sr. Regional Manager shall be the sole authority to determine the said failures on the part of the contractors or the loss caused thereby, thus excluding the reference to the arbitrator for the decision of these disputes. (Para 8)
High Court issued a direction by order dated 16th June, 1988 referring the disputes for arbitration in terms of Clause XX. The matters which were excluded from the reference to the arbitrator therefore could not be referred to or decided by the arbitrator. Entrance of reference by the arbitrator on disputes which were excluded from reference and the adjudication thereupon would amount to exceeding in the exercise of the jurisdiction as held by this Court in Rajasthan State Mines & Minerals Ltd. s case (supra). Since there was a specific bar to the raising of a claim regarding transit, demurrage and wharfage charges, the award made by the arbitrator in respect thereof would be in excess of the jurisdiction. (Para 9)
Held consequently : Accordingly, the appeal is partly allowed. Order of the High Court confirming the award regarding the aforesaid two amounts as well, is set aside. Award of the arbitrator on issues 3 and 5 relating to the refund of Rs. 67,149.65 paise towards the transit loss and the refund of Rs. 1,68,500/- towards demurrage and wharfage charges is set aside. Corporation would not be liable to pay these amounts. There is no infirmity in the award regarding other claims made by the respondents. There shall be no order as to costs. (Para 10)
JUDGMENT
Bhan, J.-Food Corporation of India (for short "the Corporation") has filed this appeal against the Division Bench judgment and order of the High Court of Calcutta whereby and where under the High Court has upheld the award made by the arbitrator appointed under the directions of the Court.
Facts :
2. Respondent was appointed as a handling and transport contractor on 14th June, 1979. On 4th January, 1980 respondent addressed a letter to the Managing Director of the Corporation requesting him to refer the disputes which had arisen between the parties for arbitration. Since no arbitrator was appointed to resolve the dispute, he filed an application under Section 20 of the Arbitration Act, 1940 (for short "the Act") in the High Court on the original side, with a prayer to issue a direction to the Managing Director of the Corporation to appoint an arbitrator in terms of the arbitration Clause XX of the agreement entered between the parties. Court by its Order dated 16th June, 1988 issued a direction to the Managing Director of the Corporation to appoint an arbitrator in terms of Clause XX of the agreement within six weeks from the date of communication of the order. The direction was given in the following terms:
Court Order in terms of prayer (a) of the petition. The Managing Director, Food Corporation of India is directed to appoint an arbitrator in terms of Clause 20 of the agreement within six weeks from the date of communication of the order. All disputes in the petition particularly the disputes mentioned in para 24 thereof be referred to the Arbitrator to the appointed by the Managing Director.
Let it appear marked to be mentioned 8 weeks hence.
All parties including Managing Director, Food Corporation of India and the proposed Arbitrator to act on a signed copy of the minutes of the Order on the usual undertaking."
3. The relevant portion of the Clause XX is as under:
"All disputes and difference arising out of or in any way touching or concerning this agreement whatsoever (except as to any matter the decision of which is expressly provided for in the contract) shall be referred to the sole arbitration of any person appointed by the Managing Director of the Food Corporation of India. It will be no objection to any such appointment that the person appointed is or was an employee of the Corporation that he had to deal with the matters to which the contract related and that in the course of his duties as such employee of the Corporation he had expressed views on all or any of the matter in dispute or difference. The award of such arbitrator shall be final and binding on the parties to this contract. It is a term of this contract that in event of such arbitrator to whom the matter is originally referred being transferred on vacating his office or dying or being unable to act for any reason. Managing Director of the Food Corporation of India at the time of such transfer, vacation of office, death or inability to act shall appoint another person to act as arbitrator. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed as aforesaid should act as arbitrator and if for any reason that is not possible the matter is not to be referred to arbitration at all."
4. Under this clause all disputes and differences arising out of or in any way concerning the agreement whatsoever were to be referred to the sole arbitration of a person appointed by the Managing Director except as to any matter the decision of which was expressly provided for in the contract. Clause XII enumerates the items excluded from the purview of clause XX. Relevant sub-clauses (a), (d) and (e) of Clause XII are as under:
"(a) The contractors shall be liable for all costs, damages, demurrages, wharfage charges and expenses suffered to incurred by the Corporation due to the contractors negligence and unworkman like perfo
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