2006 Supreme(SC) 810

2006(7) Supreme 363
SUPREME COURT OF INDIA
(From Rajasthan High Court)
H.K. Sema & A.K. Mathur, JJ.
Rajasthan State Road Transport Corpn.—Appellant
versus
Indag Rubber Ltd.—Respondent
Civil Appeal No. 7032 of 2001
Decided on 5-9-2006
Counsel for the Parties :
For the Appellant : Sushil Kumar Jain, Sarad Singhania and H.D. Thanvi, Advocates
For the Respondent : S. Ganesh, Sr. Advocate, P. Venugopal, Ms. Surekha Raman and Dileep P. (for M/s K. J. John & Co.) Advocates.

Headnote:Arbitration Act, 1940—Section 30 —Arbitration Award—Dist. Judge made award rule of court—High Court set aside the Judgment in writ jurisdiction holding that method of assessment was not in conformity with reference to warranty clause 5 and that inspection reports as well other documentary evidence led by parties did not show comparative assessment as stipulated in Clause 5 of the agreement—Appeal—Appellant Corporation agreed to purchase cold processing retreading plant and retreading material and various terms and stipulations were incorporated in agreement—Grievance of Corporation that retreaded tyres used on its buses could not achieve the guaranteed kilometers as per warranty clause 5 and it put up a claim of Rs.1,19,53,430 with interest at 18% towards loss—Sole arbitrator i.e. Principal Secretary, Home and Justice, Govt. of Rajasthan was appointed—Arbitrator decided all issues in favour of Corporation and concluded that Corporation suffered a loss of Rs. 1,19,53,430/- and gave award for the amount with interest at 12% p.a.—Arbitrator in his detailed award had recorded his finding on basis of average performance of new vehicles with that of retreaded tyres of Company—Findings recorded by Single Judge were factually incorrect—Single Judge erroneously took upon himself to sit as a Court of appeal and disturbed finding of fact—Impugned order could not be sustained—Interest at 12% p.a. however was no higher side and reduced to 6% p.a.

       Held : We asked learned counsel for the appellant-Corporation to substantiate the finding recorded by the arbitrator that it is based on the material on record. In pursuance to the direction given by this Court, learned counsel for the Corporation filed an affidavit on 12.7.2006 and submitted that the document wherein the details on divisionwise average kilometer of new tyres and retreaded tyres along with average short-fall in guaranteed kilometers for the various periods was on record of arbitrator & same was produced before us. The details were given of all the Divisions i.e. Bharatpur, Jaipur, Sikar, Kota, Ajmer, Bikaner, Jodhpur and Udaipur. In all these eight divisions, for the various period i.e. from June 1991 to February, 1994 the details have been given to substantiate the allegations that what was the average mileage of the new tyre and what was the average mileage given by the retreaded tyres and on that basis, the short-fall was given and accordingly, the amount of loss was worked out. These details which were placed before us formed part of the record before the arbitrator. The arbitrator in his detailed award has recorded his finding on the basis of the average performance of new vehicle tyres with that of the retreaded tyres of the Company and on that basis he has worked out the assessment in paragraph 17 of the award.(Para 7)

       This is the finding of fact given by the arbitrator. As against this, learned Single Judge as mentioned above, has held that there was no assessment in each division in similar conditions. Therefore, the learned Single Judge set aside the award but it is not factually correct. As mentioned above, there was a comparative assessment given by the Corporation and that was part of the record before the arbitrator and on that basis the finding of fact was recorded by the arbitrator. Learned counsel for the respondents strenuously urged before us that the performance of new tyres and of retreaded tyres on roads like Jaipur-Delhi would be better as against the road of Jaipur-Lalsot. Therefore, there was no assessment of performance of the new tyres vis-a-vis the retreaded tyres supplied by the Company in similar conditions. In fact, an average has to be taken of each division. It is not necessary that in each of the divisions of the Corporation, the road conditions will be similar. Once the company has entered into an agreement knowing fully well the conditions obtaining in the State of Rajasthan that all the routes in the State are not the roads of Class ‘A’ category but there are roads of class ‘A’, Class ‘B’ and Class ‘C’ categories also. Therefore, the average performance has been recorded taking into consideration this aspect. It is unlikely that all over the State of Rajasthan the road condition like Jaipur-Delhi will be available for all other divisions. Therefore, in all the divisions the average performance has been taken into consideration. The assessment has been based on average of similar conditions of the roads i.e. the good quality as well as the poor quality. Therefore, average performance of the new tyres with the retreaded tyres has to be taken on the basis of roads available in Rajasthan. The average running of the new tyres on these road conditions with that of the retreaded tyres was to be compared to find out whether the performance of retreaded tyres was up to 95% average or not. After assessing the comparative assessment and going through the materials on record the arbitrator has recorded his finding. It was also for the company if they wanted more information or wanted to allege that the road conditions are not similar or that the performance of the tyres which were fitted in the rear axle or on the front axle would not be the same, all these details if it wanted, it could have obtained from the Corporation but they did not do so and only at this stage the company wants to bring this factual controversy that retreaded tyres were not used in similar conditions. This argument at this belated stage cannot be accepted as all the materials have been considered by the arbitrator and after taking into consideration the average of each tyre in each region of the corporation has worked out that the performance of the retreaded tyres was not to the extent of 95%. This was a finding of fact recorded by the arbitrator and the same was made rule of the court by the District Judge. But the learned Single Judge erroneously took upon himself to sit as a court of appeal and disturbed this finding of fact. In our opinion, the view taken by the learned Single Judge of the High Court cannot be sustained.(Para 7)

       After bestowing our best of consideration, we are of opinion that awarding of interest at the rate of 12% per annum from the date of award i.e. 4.4.1997 till the realization of the amount will be too excessive. Therefore, looking to the peculiar facts and circumstances of this case, we reduce the rate of interest from 12% to 6% per annum. We allow this appeal and set aside the judgment and order dated 22.12.2000 passed by learned Single Judge of the High Court of Rajasthan at Jaipur in SBCMA No.618 of 2000 and affirm the decree passed by the District Judge, Jaipur City making the award rule of the Court. The appellant shall be entitled to interest at the rate of 6% per annum from the date of the award till realization of the amount in question.(Para 8)