Back
1996 Supreme(Bom) 556
BOMBAY HIGH COURT
S.M. Jhunjhunwala, J.
PRAKASHNARAYAN SHAKTIA - PETITIONER
v.
HOTEL CORPORATION OF INDIA LIMITED AND ANOTHER - RESPONDENTS
Arb. Petition No. 20 of 1993 in Award No. 114 of 1992,
Decided on: October 7, 1996
Sh. Virag V. Tulzapurkar, Ms. Nitya Mehta i/b. Sh. Mehta Advocates, for the Petitioner.
Sh. S.U. Kamdar, Sh. R.C. Dhuru, Sh. K.B. Swamy and Ms. E. Pereira i/b. M/s. Bhasin & Co. Advocates, for the Respondents.
The principles as laid down by the Supreme Court to term a contract as unconscionable do not apply to the facts of the present case.
Headnote:
ARBITRATION - AWARD - CHALLENGE - GROUNDS - JURISDICTION OF ARBITRATOR - EXTENSION OF TIME - UNCONSCIONABLE CONTRACT - EVIDENCE - MISCONDUCT OF ARBITRATOR - DECREE IN TERMS OF AWARD.
Fact of the Case:
Petitioner challenged an arbitration award dated 29th August, 1992, filed in Court and numbered as Award No. 114 of 1992, seeking to set it aside and supersession of the arbitration agreement contained in the agreement dated 12th April, 1989.
Finding of the Court:
1. The petitioner had signed the agreement willingly and had given the guarantee on behalf of the 2nd Respondent without any pressure or force from the 1st Respondent. 2. The petitioner had willing agreed to refer the disputes arising under the contract to arbitration in terms as provided in Clause 16 thereof. 3. The arbitration agreement did provide that the dispute between the parties could be referred to the sole arbitrator of a nominee of the 1st Respondent. 4. Such a clause contained in the said agreement was not unusual. 5. In number of cases, the Government Officers are given power to appoint any person as arbitrator. 6. The principles as laid down by the Supreme Court to term a contract as unconscionable do not apply to the facts of the present case. 7. The petitioner had signed the said agreement willingly and had given the guarantee on behalf of the 2nd Respondent without any pressure or force from the 1st Respondent. 8. The petitioner had willing agreed to refer the disputes arising under the contract to arbitration in terms as provided in Clause 16 thereof. 9. It is, therefore, not possible to hold that the arbitration agreement is unconscionable. 10. The documents produced before the arbitrator have been considered by the arbitrator. 11. As aforesaid, the quality and quantity of evidence is for the arbitrator to decide. 12. The technical rules of Law of Evidence do not apply to the proceedings before an arbitrator. 13. Though Mr. Tulzapurkar, has put reliance on the case of Delhi Development Authority New Delhi v. M/s. Alkaram, New Delhi (AIR 1982 Delhi 365), in support of his submission that if there is no evidence before an arbitrator or award is based on no evidence, the Court can set aside such an award. 14. In the facts of the case, it cannot be held that the Award is based on no evidence at all. 15. The adequacy of evidence is not to be examined by the Court in the present proceedings. 16. Admittedly, six documents were produced by the 1st Respondent before the arbitrator which, according to the arbitrator, were sufficient to adjudicate the claim of the 1st Respondent. 17. Mr. Tulzapurkar also submitted that irrational conduct on the part of the arbitrator amounted to the arbitrator misconducting himself and in support of his submission he has put reliance on the judgment of the Supreme Court in the case of Union of India v. Jain Associates (1994) 4 SCC 665 = 1994(1) Arb. LR 494). 18. Mr. Tulzapurkar submitted that when claim C was rejected by the arbitrator, the Claim B of the 1st Respondent should also have been rejected. 19. Mr. Tulzapurkar is not right in his submission. 20. In view of material documents being produced before the arbitrator, which have been considered by the arbitrator, the principle laid down by the Supreme Court in the case of Jain Associates has no applicability more particularly when in that case before the Supreme Court, material documents were produced but the arbitrator refused to look into it. 21. Such is not the situation in the present case. 22. Moreover, in my view, there is no inconsistent finding by the arbitrator. 23. The Claim C of the 1st Respondent was for training given to the 2nd Respondent in India prior to sending him abroad and since this claim could not be proved by the 1st Respondent, which claim was independent of Claim B, Claim C, was not granted by the Arbitrator. 24. There is no error of law on the face of the Award 'since no erroneous proposition of law has been set out in the Award which has been made as the basis thereof.
Issues: 1. Whether the arbitration agreement contained in the agreement dated 12th April, 1989, was unconscionable and hence, not binding on the petitioner? 2. Whether the arbitrator had jurisdiction to decide about his own jurisdiction? 3. Whether the time to make the Award was extended by the arbitrator by consent of the parties, was it without jurisdiction? 4. Whether the Award is perverse since large claim was allowed without evidence? 5. Whether the arbitrator misconducted himself and the proceedings before him?
Ratio Decidendi: 1. The arbitration agreement did provide that the dispute between the parties could be referred to the sole arbitrator of a nominee of the 1st Respondent. 2. Such a clause contained in the said agreement was not unusual. 3. In number of cases, the Government Officers are given power to appoint any person as arbitrator. 4. The principles as laid down by the Supreme Court to term a contract as unconscionable do not apply to the facts of the present case. 5. The petitioner had signed the said agreement willingly and had given the guarantee on behalf of the 2nd Respondent without any pressure or force from the 1st Respondent. 6. The petitioner had willing agreed to refer the disputes arising under the contract to arbitration in terms as provided in Clause 16 thereof. 7. It is, therefore, not possible to hold that the arbitration agreement is unconscionable. 8. The arbitrator had the jurisdiction to adjudicate upon the claim of the 1st Respondent against the petitioner and the 2nd Respondent and the arbitrator rightly, justly and properly exercised the jurisdiction in entertaining the claim of the 1st Respondent against the petitioner and the 2nd Respondent. 9. The parties can also extend time by consent. 10. It is not open to arbitrators at their own pleasure without consent of the parties to the agreement to enlarge time for making the award. 11. In the instant case, as aforesaid, the parties did agree to extend the time by consent and accordingly, the arbitrator rightly. legally and validly extended she time to make and publish the Award till 31st August, 1992. 12. The documents produced before the arbitrator have been considered by the arbitrator. 13. As aforesaid, the quality and quantity of evidence is for the arbitrator to decide. 14. The technical rules of Law of Evidence do not apply to the proceedings before an arbitrator. 15. Though Mr. Tulzapurkar, has put reliance on the case of Delhi Development Authority New Delhi v. M/s. Alkaram, New Delhi (AIR 1982 Delhi 365), in support of his submission that if there is no evidence before an arbitrator or award is based on no evidence, the Court can set aside such an award. 16. In the facts of the case, it cannot be held that the Award is based on no evidence at all. 17. The adequacy of evidence is not to be examined by the Court in the present proceedings. 18. Admittedly, six documents were produced by the 1st Respondent before the arbitrator which, according to the arbitrator, were sufficient to adjudicate the claim of the 1st Respondent. 19. Mr. Tulzapurkar also submitted that irrational conduct on the part of the arbitrator amounted to the arbitrator misconducting himself and in support of his submission he has put reliance on the judgment of the Supreme Court in the case of Union of India v. Jain Associates (1994) 4 SCC 665 = 1994(1) Arb. LR 494). 20. Mr. Tulzapurkar submitted that when claim C was rejected by the arbitrator, the Claim B of the 1st Respondent should also have been rejected. 21. Mr. Tulzapurkar is not right in his submission. 22. In view of material documents being produced before the arbitrator, which have been considered by the arbitrator, the principle laid down by the Supreme Court in the case of Jain Associates has no applicability more particularly when in that case before the Supreme Court, material documents were produced but the arbitrator refused to look into it. 23. Such is not the situation in the present case. 24. Moreover, in my view, there is no inconsistent finding by the arbitrator. 25. The Claim C of the 1st Respondent was for training given to the 2nd Respondent in India prior to sending him abroad and since this claim could not be proved by the 1st Respondent, which claim was independent of Claim B, Claim C, was not granted by the Arbitrator. 26. There is no error of law on the face of the Award 'since no erroneous proposition of law has been set out in the Award which has been made as the basis thereof.
Final Decision: Petition dismissed with costs.
S. M. Jhunjhunuwala, J. - By this petition, the petitioner seeks to have the Award dated 29th August, 1992 filed in this Court and numbered as Award No. 114 of 1992 set aside and supersession of the arbitration agreement contained in agreement dated 12th April, 1989.
2. The petitioner has been in the employment of 1st Respondent and, at the material tunes, was working in the Engineering Department thereof. The 2nd Respondent was also in the employment of the 1st Respondent. One Raghavendra Kulkarni was working in th Engineering Department of the 1st Respondent where at the petitioner, at all material times, was also working. According to the petitioner, being in the same Department, the petitioner knew the said Raghavendra Kulkarni. The 2nd Respondent was a friend of the said Raghavendra Kulkarni.
3. It is the case of the Petitioner that in or around the month of March, 1989, the Petitioner was informed by the said Raghavendra Kulkarni that the 2nd Respondent was selected by the 1st Respondent for training abroad and was in need of a character certificate which the said Rahavendra Kulkarani had agreed to give him. The said Raghavendra Kulkarni inquired of the Petitioner whether the petitioner would witness the papers which were required to be executed between the Respondents. According to the petitioner, the petitioner answered the query in the affirmative and on or about 12th April, 1989, the 2nd Respondent came to the said Raghavendra Kulkarni and asked him to sign some papers who signed the same. It is also the case of the Petitioner that the said Raghavendra Kulkarni, thereafter accompanied by the 2nd Respondent approached the petitioner and informed the petitioner that he had issued a character certificate and requested the petitioner to witness certain papers. According to the petitioner, the Petitioner in good faith and on the basis of the representations made by the said Raghavendra Kulkarni and the 2nd Respondent, signed at the place shown by the 2nd Respondent. The Petitioner believed the representations made by the 2nd Respondent and the said Raghavendra Kulkarni without reading or knowing the contents of the papers and only when the Petitioner was served with the papers in the matter of arbitration, the petitioner, on going through the papers, learnt that this signatures were taken on an agreement purporting to name the petitioner as guarantor therein. It is also the case of the petitioner that on perusal of the said agreement and the claim of the 1st Respondent against the petitioner in arbitration, the Petitioner realised the fraud which, according to the petitioner, was perpetrated by the 2nd Respondent along with the said Raghavendra Kulkarni and that the signatures of the petitioner were fraudulently obtained by misrepresentation on the said agreement. In the arbitration commenced by the 1st Respondent against the 2nd Respondent and the petitioner on the basis of the arbitration agreement contained in the said agreement the Award has been made by which the 2nd Respondent and the petitioner have been jointly and severally directed to pay to the 1st Respondent the net sum of Rs. 1,81,910/- within a period of GO days from the date thereof with interest at the rate of 14.5% per annum from the date of the Award to the date of the decree. The costs of the arbitration determined at Rs. 5,000/- has also been directed to be paid to the 2nd Respondent. The said Award has been filed in the Court and has been challenged by the petitioner. Though the 2nd Respondent is a party to the petition, as per the Order passed on 27th August, 1996, the petition as against the 2nd Respondent has been dismissed for want of prosecution. The 2nd Respondent has also been directed under the Award to make payment of the amounts awarded to the 1st Respondent since the liability of the Petitioner and the 2nd Respondent, as determined by the arbitrator, is held to be joint and/or several. The 2nd Respondent has not challenged the said
