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1996 Supreme(Bom) 123
IN THE HIGH COURT OF BOMBAY
S.M. Jhunjhunuwala, J.
Municipal Corporation of Greater Bombay.... Petitioner.
Versus
Girjashankar R. Singh.... Respondent.
Arbitration Petition No. 241 of 1995 in Award No. 82 of 1995, decided on 29-2-1996.
Advocates appeared :
Mangal Pandya, with A.J. Bhor i/b A.H. Chheda, for the petitioner.
P.K. Samdani i/b Bagla Dandekar Co., for respondent.
Arbitration awards are not subject to the same requirements as other instruments under the Stamp Act, and courts cannot substitute their own judgment for that of an arbitrator.
Headnote:
ARBITRATION - STAMP DUTY - AWARD - VALIDITY - STAMP ACT, 1958, SECTION 34 - ARBITRATION ACT, 1940, SECTION 30 - INTERPRETATION OF CONTRACT - ERROR OF LAW - SCOPE OF JUDICIAL REVIEW.
Fact of the Case:
The Municipal Corporation of Greater Bombay (MCGB) challenged an arbitration award made in favor of Adarsh Builders, a firm that had been awarded a contract to lay a sewer pipe. MCGB argued that the award was invalid because it was not stamped in accordance with the Bombay Stamp Act, 1958, as amended by the Maharashtra Tax Laws (Levy and Amendment) Act, 1994. MCGB also argued that the arbitrator had erred in interpreting the terms of the contract and in awarding certain amounts to Adarsh Builders.
Finding of the Court:
The court held that the award was valid and enforceable. The court found that the amendment to section 34 of the Stamp Act, which required instruments to be stamped in the name of the person executing them, did not apply to arbitration awards. The court also found that the arbitrator had not erred in interpreting the terms of the contract or in awarding the amounts to Adarsh Builders.
Issues: 1. Whether the arbitration award was invalid because it was not stamped in accordance with the Bombay Stamp Act, 1958, as amended by the Maharashtra Tax Laws (Levy and Amendment) Act, 1994? 2. Whether the arbitrator had erred in interpreting the terms of the contract and in awarding certain amounts to Adarsh Builders?
Ratio Decidendi: 1. The amendment to section 34 of the Stamp Act, which required instruments to be stamped in the name of the person executing them, did not apply to arbitration awards. The purpose of the amendment was to prevent people from using sheets of paper with impressed stamps that had been purchased in someone else's name. However, arbitration awards are not instruments that are executed in the ordinary course of business. They are decisions of a tribunal that has been chosen by the parties to resolve a dispute. As such, they are not subject to the same requirements as other instruments. 2. The arbitrator had not erred in interpreting the terms of the contract or in awarding the amounts to Adarsh Builders. The arbitrator had considered all of the evidence and arguments presented by the parties and had reached a reasonable conclusion. The court could not substitute its own judgment for that of the arbitrator.
Final Decision: The court dismissed MCGB's petition and upheld the arbitration award.
2. The petitioners had invited tenders for providing and laying 1,800 mm dia R.C. (N.P. 3 Class) Pipe-Sewer along 90' D.P. road from M.H. 63 to M.H. 69 Dharavi Part IV (for short, 'the said Work'). The tender of the respondent, who has been carrying on business as sole proprietor in the firm name and style of 'Adarsh Builders', was accepted and the said work was entrusted to the respondent for being carried out by the respondent on the terms and conditions contained in the Contract entered into by and between the petitioners and the respondent. The General Conditions of Contract for civil works of the Municipal Corporation of Greater Bombay were agreed to form part of the terms and conditions of the said contract along with other documents mentioned in paragraph 3 of the petition. The work order dated 15th May, 1987 was issued in favour of the respondent and the respondent, as stipulated in the said work order, was to complete the said work within 13 months to be reckoned from 1st October, 1987. The work actually commenced from 16th December, 1987. The period for the completion of the said work was extended from time to time. It is the case of the petitioners that on review the petitioners found that the respondent was making progress in carrying out the said work at a slow pace and as such the petitioners decided to treat the contract work as complete. By their letter dated 20th September, 1990 the petitioners communicated to the respondent accordingly.
3. By the letter dated 21st March, 1991 addressed to the Chief Engineer of the petitioners, the respondent put forward the claims arising under or in respect of the said contract and gave notice to claim interest at the rate of 18% per annum if the claims of the respondent were not settled within one month therefrom. By their letter dated 29th April, 1991, the petitioners informed the respondent that except for the claim for extra work, the other claims put forward by the respondent were not acceptable. By his letter dated 30th July, 1991 addressed to the Municipal Commissioner, the respondent referred to the Municipal Commissioner the disputes and claims mentioned in the said earlier letter dated 21st March, 1991 and gave notice under Clauses 96 and 97 of the General Conditions of Contract for settlement or reference thereof to arbitration in accordance with the arbitration agreement between the petitioners and the respondent contained in the said Clause 97. The said letter dated 30th July, 1991 was addressed by the respondent in compliance with requirements of the said Clause 96. Since no decision was taken by the Municipal Commissioner and the period mentioned in Clause 96 lapsed, the respondent addressed another letter dated 14th August, 1992 to the Municipal Commissioner to choose one of the three names suggested therein for appointment as the sole arbitrator and intimated to the Municipal Commissioner that in case of failure to do so, the respondent would approach the President, Institute of Engineers (India) for appointment of a sole arbitrator. Since the petitioners did not comply with the requisitions contained in the said letter, by his letter dated 21st September, 1992, the respondent called upon the President, Institute of Engineers (India), Calcutta to appoint a sole arbitrator in terms of Clause 97(ii) of the General Conditions of Contract. By its letter dated 9th December, 1992, the Institute of Engineers (India) appointed one M.C. Bhide as the sole arbitrator in the disputes referred to arbitration by the respondent. The said M.C. Bhide as sole Arbitrator has made the award on 28th April, 1995 which has been filed in this Court and numbered as Award No. 82 of 1995. The said award has been challenged by the petitioners by the
