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1996 Supreme(Bom) 507

BOMBAY HIGH COURT
B.P. Saraf, D.G. Deshpande, J.
UNION OF INDIA - APPELLANT
v.
MEHTA CONSTRUCTION CO. - RESPONDENT
Appeal No. 189 of 1995 in Arb. Petn. No. 213 of 1990 in Award No. 73 of 1990,
Decided on: September 11, 1996

Advocates appeared:
Ms. S.J. Shah i/b Bhattacharya Advocate, for the Appellant.
Ms. Rajni Bagwe i/b M/s. Choksey & Co. Advocate, for the Respondent.

The court's jurisdiction to interfere with an arbitration award is limited. The court does not sit in appeal over the award and review the reasons. The reasonableness of the reasons given by an arbitrator in making the award cannot be challenged before the court.

Headnote:

ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - COURT'S JURISDICTION - LIMITED - COURT CANNOT SIT IN APPEAL OVER AWARD AND REVIEW REASONS - ARBITRATOR SOLE JUDGE OF QUALITY AND QUANTITY OF EVIDENCE - COURT CANNOT RE-ASSESS EVIDENCE OR DECIDE ADEQUACY THEREOF - REASONABLENESS OF AWARD NOT A MATTER FOR COURT'S CONSIDERATION UNLESS AWARD PER SE PREPOSTEROUS OR ABSURD - AWARD CAN BE SET ASIDE ONLY IF NO EVIDENCE TO SUPPORT CONCLUSION OR BASED ON ERRONEOUS PROPOSITION OF LAW - ERROR ON FACE OF AWARD NOT ESTABLISHED MERE DEMONSTRATION OF MISTAKE BY INFERENCE AND ARGUMENT NOT SUFFICIENT.

Fact of the Case:

The Union of India challenged an arbitration award in favor of M/s. Mehta Construction Co. The award granted various amounts to the respondents under different claims. The Union of India contended that the arbitrator exceeded his jurisdiction and committed manifest error of law in awarding interest pendente lite.

Finding of the Court:

The court held that the arbitrator did not exceed his jurisdiction or commit any error of law in awarding the amounts under the various claims. The court also held that the arbitrator had the power to grant interest pendente lite.

Issues: 1. Whether the arbitrator exceeded his jurisdiction in allowing the claims. 2. Whether the arbitrator committed manifest error of law in awarding interest pendente lite.

Ratio Decidendi: 1. The court held that the arbitrator did not exceed his jurisdiction or commit any error of law in awarding the amounts under the various claims. The court reasoned that the arbitrator had properly construed Clause 10(c) of the contract and appreciated the facts of the case. 2. The court held that the arbitrator had the power to grant interest pendente lite, relying on the Supreme Court decision in Secretary, Irrigation Department v. G. C. Roy.

Final Decision: The court dismissed the appeal, holding that the arbitrator did not exceed his jurisdiction or commit any error of law in awarding the amounts under the various claims and that the arbitrator had the power to grant interest pendente lite.

JUDGMENT

Dr. Saraf, J. - This is an appeal of the Union of India from the judgment and order of the learned single Judge dated 18th October, 1994, rejecting the Arbitration Petition of the appellants for selling aside the award of the arbitrator.

2. The facts of the case briefly stated are as follows:

"The appellants entered into an agreement with the respondents. M/s. Mehta Construction. Co., for the construction of the G.M.T. Office Block at Cadell Road, Dadar, Bombay. The value of the work was Rs. 2,06,974,162.35. The contract was executed by and between the parties for execution of the above work. Under the terms of the contract, the work was to be completed by 20th February, 1983. However, the time for completion was extended by the appellants up to 20th August, 1985 and the work was also completed by the respondents by that time. During the progress of the work, payment were made by the appellants to the respondents from item to time. After the completion of the work, the respondents by their letter dated 21st January, 1987 raised several disputes and claims and the same having not been settled by the appellants, requested the Chief Engineer (Construction), North-West Zone, to refer the said disputes and claims for arbitration under Clause 25 of the contract. Accordingly, the disputes were to one Mr. J. Pal, Superintending Engineer (Civil), Telecom Civil Circle, Bhopal, as the sole arbitrator. The arbitrator gave his award on 12th June, 1989. By the said award a sum of Rs. 6,37,472/- was awarded by the arbitrator in favour of the respondents together with interest at the rate of 18% from 12th September, 1989 i.e., from three months after the date of the award till final payment. The above amount awarded by the arbitrator comprised of various amounts awarded under the Claims Nos. 1, 2, 10, 12, 21, 24 and 25. The appellants challenged the above award before the learned single Judge by filing an arbitration petition and prayed that the award should be declared null and void and set aside."

3. In the arbitration petition, the appellants had prayed that the entire award should be set aside. At the time of hearing before the learned single Judge, the challenge was confined to the award insofar as it pertained to the amounts awarded against claims Nos. 1, 2, 10, 12, 24 and 25. The learned Judge considered the submissions of the appellants in regard to each of the above claims and came to the conclusion that no case has been made out by the appellants for interfering with the award in regard to any of the claims mentioned above. The learned single Judge observed that the appellants, in fact, were seeking to challenge the reasons or the reasonableness of the reasons given by the arbitrator in support of the award. The learned single Judge held that it was not open. for the parties to the arbitration to challenge the award of the arbitrator on these grounds. The learned single Judge, therefore, did not find any merit in any of the contentions of the appellants and hence dismissed the arbitration petition and made the award rule of the court.

4. Aggrieved by the above order of the learned single Judge, the Union of India is in appeal before us. Though before the learned single Judge, the award was challenged in respect of a number of claims the challenge before us in this appeal is confirmed to the amounts awarded against Claims No. 1, 2 and 25 only. Under the claim No. 1, a sum of Rs. 2,06,039/- was awarded by the arbitrator. This amount was awarded to the respondents in respect of steel bars supplied by the Government on the ground that were not of specific weight. The arbitrator found that though the steel bars were issued by the Government to the contractors on actual weighment basis, the payment was made on the basis of die weight by measuring actual linear measurements multiplied by standard specific weight. The arbitrator came to the conclusion that the standard specific weight, which was a multiplier, was not as per the spe









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