2003 Supreme(SC) 1002

2003(8) Supreme 264
SUPREME COURT OF INDIA
(From Bombay High Court)
V.N. Khare, CJI., S.B. Sinha, J.
Pure Helium India Pvt. Ltd. -Appellant
versus
Oil & Natural Gas Commission -Respondent
Civil Appeal No. 6478 of 2001
Decided on 9-10-2003
Counsel for the Parties :
For the Appellant : Dipankar P. Gupta, Sr. Advocate, Ashok Mathur, Advocate.
For the Respondent : Mukul Rohtagi, Additional Solicitor General, Saurabh Kirpal, Subhash Oberoi, C.M. Gopal and K.V. Mohan, Advocates.

IMPORTANT POINT
If the claim of the claimant is not arbitrable having regard to the bar/prohibition created under the contract, the court can set aside the award but unless such a prohibition/bar is found out, the court cannot exercise its jurisdiction under Section 30 of the Arbitration Act.

Headnote:(i) Arbitration Act, 1940-Section 30-Arbitration Award-Objections-Jurisdiction of an arbitrator to interpret a contract-Whether can be subject matter of an objection u/s 30 of the Act-Held, if claim of claimant is not arbitrable having regard to bar/prohibition created under the contract, court can set aside the award-But unless such a prohibition/bar is found out, court cannot exercise its jurisdiction under Section 30 of the Act-Jurisdiction of arbitrator will be ousted only in the event that there exists a specific bar in the contract as regard raising of a particular claim-Court would not be justified in construing the contract in a different manner and then to set aside the award by observing that the arbitrator had exceeded the jurisdiction in making the award, when the arbitrator is required to construe a contract, only because another view is possible. (Paras 32 & 42)

       (ii) Arbitration Act, 1940-Section 30-Arbitration Award-Objections-Contract for supply of Helium Diving Gas pursuant to a notice inviting global tender-Helium gas being one of the rare gases being not chemically produced is ordinarily imported from U.S.A., Algeria, Poland and Russia-In terms of notice inviting tender, three different categories of rates were to be quoted by tenderers both foreign and Indian-Whereas foreign tenderers were to quote their prices in foreign currency, Indian bidders could indicate the nature of payment, i.e. if a part thereof was recoverable having foreign exchange component-Appellant s bid was found to be the lowest in that appellant had bid a price of Rs. 149/- per cubic meter out of which US $ 4.60 was to be foreign exchange component-Respondent issued supply orders-Having regard to increase in price of US dollar, appellant claimed difference of price of US dollar as on date of contract and date of supply-Respondent rejected the claim-Arbitration proceedings-Non speaking award holding that respondent was liable to compensate appellant for Exchange Rate Fluctuation-Objection u/s 30 of the Act-Award made rule of Court-Appeal against-Whether arbitrators exceeded their jurisdiction in making the award-(No)-Construction of contract agreement was within jurisdiction of arbitrators having regard to wide nature, scope and ambit of arbitration agreement.

       Held : It is not in dispute that there were three different nature of bids; which were required to be made in terms of the notice inviting tenders : (i) by foreign bidders; (ii) by Indian bidders quoting Indian price with the foreign exchange component therefor as import was required to be made; (iii) payable only in Indian rupee without foreign exchange component. (Para 21)

       The learned arbitrators, as noticed hereinbefore, in making the award took into consideration the documentary as well as circumstantial evidence including rival pleadings of the parties. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. (Para 25)

       Construction of the contract agreement, therefore, was within the jurisdiction of the learned arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot, thus, be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties as also the circumstantial evidence. (Para 27)

       The principles of law laid down in the aforementioned decisions leave no manner of doubt that the jurisdiction of the court in interfering with a non-speaking award is limited. The upshot of the above decisions is that if the claim of the claimant is not arbitrable having regard to the bar/prohibition created under the contract, the court can set aside the award but unless such a prohibition/bar is found out, the court cannot exercise its jurisdiction under Section 30 of the Act. The High Court, therefore, misdirected itself in law in posing a wrong question. It is true that where such prohibition exists, the court will not hesitate to set aside the award. In the instant case, the appellant did not ask for any enhancement in the price. It only asked for the difference in price occurred owing to fluctuation in the rate of dollar. It is true that by taking recourse to the interpretation of documents, the appellant did not become entitled to claim a higher amount than Rs. 149/- but, thereby the appellant had not unjustly enriched itself. Had the price of the dollar fallen, the respondent would have become entitled to claim the difference therefor. (Paras 41 to 44)

       The very fact that three different types of quotations were invited from the bidders itself is suggestive of the fact that each one of them was required to be construed in such a manner so as to apply in different situations. The submission of Mr. Rohtagi, the learned Additional Solicitor General to the effect that if such a factor was to be taken into consideration, the person who had quoted only in terms of Indian rupee would be at a disadvantage is stated to be rejected. The question as to whether suppliers quoting their bid in Indian currency alone would face disadvantage or not will depend upon the question as to whether they were similarly situated. One bidder may have to import the raw-materials; other may not have to. This itself will lead to a difference. In fact, those who did not bid with the amount of foreign exchange component cannot be placed on equal footing to those who in their bid pursuant to the notice inviting tender disclosed that they would have to make import wherefor only the foreign exchange component in the price had to be disclosed. (Para 47)