Challenge to arbitral award-Role of Civil Court is only supervisory to minimum level.

M. Satyanarayana Murthy, J.

1. The first respondent in Arbitration Original Petition No.247 of 2003 preferred this Appeal against the impugned Order dated 25.03.2003, passed in Arb.O.P. No.247 of 2003 by the III Additional District Judge, Kakinada, East Godavari District, allowing the petition filed under Section 34 of Arbitration and Conciliation Act, 1996 (For short, ‘the Act’) setting aside the impugned Award passed by the Sole Arbitrator, second respondent herein.

2. The appellant herein was the first respondent and the first respondent herein was the petitioner and the second respondent herein was the second respondent before the III Additional District Judge, Kakinada (For short, ‘the Civil Court’). For the sake of convenience, the parties hereinafter will be referred as arrayed before the Civil Court.

3. The petitioner filed a petition before the Civil Court under Section 34 of Arbitration and Conciliation Act, 1996 (For short, ‘the Act’) seeking to set-aside the impugned award dated 21.04.2003, passed by the second respondent, in favour of the first respondent, alleging that the first respondent insured its factory with the petitioner for a total sum of Rs.54,45,216/- on all his assets including raw materials and tyres, on various dates, by obtaining 8 policies. Subsequently, a fire accident took place on 01.07.2001 and lost major portion of the property. Thereafter, the first respondent submitted claim for Rs.55,61,590/- towards full and final settlement, but the first respondent-appellant did not accept the amount offered by the petitioner-Insurance Company. Thereupon, the matter was referred to sole arbitrator-second respondent, who is a retired officer of the Insurance Company.

4. The sole arbitrator commenced arbitration proceedings on 11.09.2002; after following due procedure, recorded the evidence of PW.1, marked Exs.P-1 to P-41 on behalf of the appellant, petitioner therein, examined RWs.1 to 3 and marked Exs.R-1 to R-56 on behalf of the first respondent, respondent, before the sole arbitrator at Kakinada respectively.

5. Thereafter, the sole arbitrator passed the Award dated 21.04.2003 in favour of the first respondent-appellant and against the petitioner-first respondent.

6. Aggrieved by the impugned Award, the petitioner-Insurance Company preferred Arbitration O.P. No.247 of 2003, before the III Additional District Judge, Kakinada, raising several grounds. The main contentions raised in the grounds of Arbitration Petition are as follows:

a) The petitioner-Insurance company sought the relief of setting aside the Award passed by the sole-arbitrator alleging that the arbitrator committed grave error in visiting the factory premises without his knowledge and notice, and assessed the loss basing on his own assessment at Rs.40,47,270/- together with subsequent interest;

b) The sole-arbitrator gave go-bye to the procedure prescribed under the Arbitration and Conciliation Act, Rules framed thereunder;

c) The impugned Award of the Arbitrator is not based on technical or legal basis, did not follow the procedure prescribed under Sections 24, 28 and 31(c) of Arbitration and Conciliation Act and exceeded his powers, thereby the Award is liable to be set-aside;

d) The Award of the Arbitrator is biased, the conclusions arrived by the arbitrator are based on presumptions and assumptions, not on the basis of any evidence, thus the sole arbitrator violated terms and conditions and principles of natural justice in passing the Award;

e) The Arbitrator dealt with the dispute beyond his reference and visited the factory premises without the consent and notice of the petitioner-Insurance Company, which amounts to misconduct on the part of the Arbitrator and thereby the Award is liable to be set-aside;

f) The arbitrator obtained report from M/s. S.D. Associates without giving any opportunity to the petitioner-Insurance Company and without any prior information and the procedure adopted by the arbitrator is again