IMPORTANT POINT
When a plausible view had been taken by the arbitrator and unless the award of the arbitrator was vitiated by a manifest error on the face of the award or was wholly improbable or perverse, it was not open to the Court to interfere with the award within the statutory interpretation set out in Section 30 of the Arbitration Act, 1940.

Headnote:Arbitration Act, 1940--Section 30 rw/s 33—Arbitration Award—Objections filed u/s 30 rw/s 33—Powers of Court to interfere—Appellant and respondent entered into a contract for erection, installation and commission of Oxygen Plant—Letter of intent was signed and purchase orders were issued by respondent in favour of appellant—Respondent agreed to pay interest on margin money and reimburse the same to appellant—Appellant raised final invoices and respondent raised claims and sought refund from appellant—When refund not made by appellant, respondent made an application u/ss 8 and 33 of the Act for appointment of an arbitrator—Award passed in favour of respondent—Counter claim of appellant rejected—Appellant filed an application for setting aside the award passed by the Arbitrator—According to appellant, Arbitrator had misconducted himself in passing the award u/s 30(1)(a) of the Act—Arbitrator had considered all aspects of the matter including terms of the contract and all the materials on record and has come to a conclusion of fact—Whether it is open to the Court to interfere with the award —(No).
       Held : So far as the facts of the present case are concerned, we do not think that the award of the Arbitrator can at all be interfered with as the award was not based upon either a proposition of law which is unsound or an erroneous proposition of law was established to have vitiated the decision. As noted herein earlier, the Arbitrator had considered all aspects of the matter including the terms of the contract and all the materials on record and the statement of claim and has come to a conclusion of fact. Such being the position, we cannot but hold that the award was not based upon a proposition of law which is unsound or an error of law must have appeared from the award itself or from any document or note incorporated in the award or appended to it.(Para 24)
       In this view of the matter, it is not open to the court to set aside the award on the ground that the learned Arbitrator had, while continuing with the proceeding, acted beyond his jurisdiction and violated the contract while awarding Rs. 17,95,710/- in the form of Award No.9. In our view, this cannot be said to have an award, which is contrary to the contract entered into by the parties. It is also not the case where the learned Arbitrator had failed to consider material documents produced by the parties for arriving at a right decision. On the other hand as noted herein earlier, we are of the considered view that the Learned Arbitrator had duly considered the statement of claim and the terms and conditions of the contract and the material documents produced by the parties, which were available on record, and came to a conclusion rightly in favour of the respondent. The Learned Arbitrator also came to a conclusion that the aforesaid figure of Rs. 17,95,710/-, was included as lump sum contract price as consideration payable to the respondent for service rendered by them for importation of plants and components. In any view of the matter, when the Arbitrator had taken a plausible view on interpretation of contract, it is not open to the court to set aside the award on the ground that the Arbitrator had misconducted himself in the proceedings and therefore, the award was liable to be set aside.(Para 26)
       That apart, the amount of Rs. 17,95,710/- was recovered by the appellant under the bill issued against indigenous supplies and amount were paid without any objection by the respondent. Such being the position we are unable to agree with Mr. Sorabjee that the award was liable to be set-aside on the aforesaid ground. (Para 28)

JUDGMENT

Tarun Chatterjee, J.—Leave granted.

2. This is an appeal from a judgment of a Division Bench of the Calcutta High Court dismissing an appeal which was filed against the judgment of a learned Judge refusing to accept the objection filed by the appellant under Section 30 read with Section 33 of the Arbitration Act, 1940 (hereinafter referred to as the “Act”).

3. The brief facts of this appeal are as follow:

BOC Ltd. being the appellant herein and one Nippon Sansa K.K. (NSKK) entered into an agreement in order to facilitate the respondent to import components for setting up a 25 tons per day Oxygen plant at Ghatsila, Bihar (now in the State of Jharkhand). In the month of April/May 1990 the appellant and the respondent entered into a contract for erection, installation and commission of the aforesaid plant at Ghatsila, Jharkhand. On 5th June 1990 a tripartite meeting between the representatives of the appellant and the respondent and NSKK were held where the letter of intent was signed and purchase orders were issued by the respondent in favour of the appellant. The respondent awarded a turnkey contract on 6th June, 1990 to the appellant for manufacture, supply, erection and commission of the said plant. Vide letter dated 18th December 1990, the respondent had agreed to pay interest on margin money and reimburse the same to the appellant. The appellant thereafter on 31st March 1992 raised final invoices and subsequently on13th April 1992 the respondent raised claims and sought refund from the appellant. By a letter dated 9th March 1993 the appellant informed the respondent indicating therein the interest payable by them to the respondent. Finally, when the prior invoice and letter were not responded to, on 13th September 1993 the respondent again raised claims and sought refund from the appellant. When the refund was not made by the appellant, the respondent made an application under Sections 8 and 33 of the Act for the appointment of an arbitrator on 24th November 1995 in the High Court at Calcutta.

4. In the meantime, on 21st September 1995 the High Court directed the appellant to release the spares to the respondent on payment of Rs. 10,19,000/- by them. A lawyer was thereafter appointed as Arbitrator by consent of the parties and the said arbitrator subsequently was replaced on 12th February, 1996 by Late Arbitrator Shri P.K. Roy. On 29th July 2000, Late Shri Roy had passed his award in favour of the respondent for a sum of Rs. 24,92,165/- with an interest of 12 per cent on the amount. However, the counter claim of the appellant was rejected.

5. On 30th October, 2000, the appellant filed an application for setting aside the award passed by the arbitrator under Section 30 of the Act before the High Court at Calcutta. In the said application, the appellant raised objection to the effect that the award in question suffered errors apparent on the face of it. It was alleged that the arbitrator erred in awarding the claim of the respondent for a sum of Rs. 17,95,710/- relating to claim no.9 although the learned arbitrator held issue no.4 in favour of the appellant. It was also alleged that since the appellant had not realised any sum in excess of Rs. 50 lacs against indigenous supply, the award of the learned arbitrator to the effect that the respondent was entitled to receive back from the appellant, the said sum of Rs. 17,95,710/-, was not only erroneous on the face of the award but also contradictory and inconsistent with the findings of the arbitrator against issue no. 4. It was further alleged by the appellant under Section 30 of the Act that the learned arbitrator committed error apparent on the face of the award and had acted in excess of his jurisdiction by awarding the aforesaid sum of Rs. 17,95,710/- in favour of the respondent as the award was contrary to the findings made by the learned arbitrator himself and therefore was liable to be set aside. We are not dealing with the other objections taken by the appellant i

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2007 Supreme(SC) 333

Cases Referred (3)