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2008(4) Supreme 299
SUPREME COURT OF INDIA
Tarun Chatterjee & Dalveer Bhandari, JJ.
Satna Stone & Lime Co. Ltd., M.P. etc. — Petitioner
versus
Union of India & Another etc. — Respondent
Appeal (civil) 5456-5457 of 2000
Decided on: 08.05.2008
Arbitration Act, 1940 – Sections 16(1)(c), 30(c) – The error apparent on the face of award contemplated by Section 16(1)(c) as well as Section 30(c) of the Arbitration Act is an error of law apparent on face of award and not an error of fact – The arbitrator has got ample power in giving an award – The arbitrator is the sole judge of the quality as well as quantity of evidence and it will not be for the court to take upon itself a task of being a judge of the evidence before the arbitrator – The court should approve award with desire to support it, if that is reasonably possible rather than to destroy it, by calling it illegal – This court has very limited jurisdiction to interfere with the reasoned award – Only when the award is based upon a proposition of law which is unjustified in law, the error of law must appear from the award itself or from any document or note incorporated in it or appended to it. (Para 18)
Facts of the Case :
1. Appellant Satna Stone & Lime Company Ltd., Satna herein in the instant case entered into an agreement with General Manager, G.I.P.Railway, Government of India, , whereby a siding was provided to company for clearance of its goods. Disputes between parties was referred to arbitration. Arbitrator decided claim in favour of appellants. Objections thereagainst raised by Railways were rejected by District Judge and award was made rule of Court. Miscellaneous application was preferred by Railways before High Court against said order of District Judge on plea that claim of appellants was clearly barred by limitation because the demand crystallized on 1.5.1975 and claim was made on 8.8.1978.High Court held that award was based on wrong principles of law.
2. Present appeals have been filed against said order of High Court.
Findings of the Court :
Even though scope of interference by court is limited and the court would not be justified in reappreciating the material on record and substituting its own view in place of arbitrator’s view.However where there is an error apparent on the face of record or where the arbitrator has not followed the statutory legal position, the court would be justified in interfering with the award of the arbitrator. The arbitrator ignored settled legal position and consequently the High Court was justified in interfering with award based on wrong principles of law. No interference was called for with impugned judgment of High Court. Appeals having no merit, were dismissed.
Result : Appeals dismissed.
JUDGMENT
Dalveer Bhandari, J. —
1. These appeals are directed against the judgment of the Division Bench of the High Court of Madhya Pradesh at Jabalpur dated 6.7.1999 delivered in Misc. Appeal No. 1058 of 1995 and Misc. Petition No.1 of 1991.
2. Brief facts relevant to dispose of these appeals are as under:-
The appellant Satna Stone & Lime Company Ltd., Satna entered into an agreement with the General Manager, G.I.P. Railway, Government of India, on 23.3.1897, whereby a siding was provided to the company for clearance of its goods. The agreement was revised from time to time and the last such agreement was executed on 1.10.1942 (hereinafter called “the agreement”).
3. The Railway administration on 24.8.1968 informed the appellants that the maintenance charges would be levied at the rate of 4=% per annum instead of 2=%. The respondent Railway administration raised the bills for the period 1.11.1963 to 31.3.1975. The appellants paid the bill under protest on 22.6.1976. The appellants filed an application under section 20 of the Arbitration Act, 1940. On the request of the appellants, the matter was referred to the Arbitration. The Arbitrator decided the claim in favour of the appellants. The objections raised by the Railways under section 30 of the Arbitration Act, 1940 were rejected by the learned District Judge and the award was made the rule of the court.
4. The miscellaneous application was preferred by the Railways before the Division Bench of the Madhya Pradesh High Court against the said order of the District Judge. The respondent Railways submitted that the claim of the appellants was clearly barred by limitation because the demand crystallized on 1.5.1975 and the claim was made on 8.8.1978.
5. This Court in Union of India v. L.K. Ahuja & Co.,1 (1988) 3 SCC 76 that the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an Order under Section 20 of the Arbitration Act, to be barred by limitation.
6. In Union of India v. Indian Sugar Mills Association, Calcutta & Another,2 AIR 1968 SC 22, the court dealt with this aspect and came to the conclusion that Railway administration was competent to increase the rate chargeable for the services rendered.
7. This aspect of the matter was also ignored by the arbitrator and the High Court rightly concluded that the award is based on wrong principles of law. If the decision of the arbitrator is contrary to law laid down by this Court then it would be justified in interfering with the award.
8. The learned counsel for the appellants has placed reliance on the judgment of this Court in B.V. Radha Krishna v. Sponge Iron India Ltd.,3 (1997) 4 SCC 693 to demonstrate that the High Court was not justified in substituting its own view in place of arbitrator’s view as if it was dealing with an appeal. This is forbidden by a series of judgments of this Court.
9. Learned counsel for the appellants has also placed reliance on Food Corporation of India v. Joginderpal Mohinderpal & Another,4 (1989) 2 SCC 347. In this case, the court relying on earlier judgment of this court in Puri Construction Pvt. Ltd. v. Union of India,5 (1989) 1 SCC 411 reiterated the legal position that the court cannot sit in appeal over the views of the arbitrator by reexamining and reassessing the material.
10. In Hindustan Construction Co. Ltd. v. Governor of Orissa & Others,6 (1995) 3 SCC 8 the court observed as follows :-
“It is well known that the Court while considering the question whether the award should be set aside, does not examine that question as an appellate court. While exercising the said power, the court cannot reappreciate all the materials on the record for the purpose of recording a finding whether in the facts and circumstances of a particular case the award in question could have been made. Such award can be set aside on any of the grounds specified in Section 30 of the Act.”
11. There is no quarrel with the proposition canvassed by the learned counse
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