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2006 Supreme(Cal) 388
High Court Of Calcutta
Before: Indira Banerjee, J.
STEEL AUTHORITY OF INDIA LIMITED - Appellant
Versus
M/S.JAIGURU CONSTRUCTION CO. - Respondent
A. C. 29 Of 2001
Decided On : 07/04/2006
The court's jurisdiction to entertain an application for setting aside an award is not ousted by a contractual forum selection clause if the parties have waived the clause.
Headnote:
ARBITRATION - Setting aside of award - Jurisdiction of court - Contractual forum selection clause - Waiver - Interpretation of contract - Error apparent on face of award - Non-speaking award.
Fact of the Case:
The petitioner issued a tender notice for removal and transportation of soil and loose blasted rejects. The respondent submitted its tender, which was accepted. A contract was executed between the parties, and the respondent failed to lift the required quantity of at least 20,000 cbm per month. The petitioner appointed an alternate agency to execute the contract work and terminated the contract. Disputes arose between the parties, and an arbitrator was appointed to adjudicate the claims. The arbitrator made and published an award allowing the respondent's claim in part and rejecting the petitioner's claim.
Finding of the Court:
The court held that the petitioner had waived the forum selection clause by submitting to the jurisdiction of the court in an earlier application. The court also held that the arbitrator's interpretation of the contract was not erroneous and that there was no error apparent on the face of the award. The court further held that the award was not a non-speaking award and that the reasons given by the arbitrator were just, fair, reasonable, and in accordance with law.
Issues: 1. Whether the court had jurisdiction to entertain the application for setting aside the award. 2. Whether the arbitrator had disregarded the terms of the contract in making the award. 3. Whether the award was a non-speaking award.
Ratio Decidendi: 1. A contractual forum selection clause can be waived by the parties. 2. The arbitrator's interpretation of the contract is binding on the parties unless it is erroneous or contrary to the terms of the contract. 3. An award is not a non-speaking award if the arbitrator has given reasons for the award, even if the reasons are brief or incomplete.
Final Decision: The application for setting aside the award was dismissed.
( 1 ) THIS is an application under section 30 and 33 of the arbitration Act, 1940 for setting aside an award, made and published by Mr. C. A. Govind, Sole Arbitrator.
( 2 ) THE petitioner issued a tender notice No. QMG Minining 1 of 1991 for removal and transportation of 4,80,000 CBM of blasted rejects and loose soil for a period of 2 years.
( 3 ) PURSUANT to the aforesaid tender notice, the respondent submitted its tender. The tender submitted by the petitioner being the lowest, the same was duly accepted.
( 4 ) A letter of intent being Ref. No. QMG-IV/17 (44)2889-92 dated 15th february, 1992 was issued to the petitioner. By a letter being Ref. No. OMQ-IV/17 (44)/7271-76 dated 8th May, 1992 the petitioner issued work order to the respondent on the terms and conditions specified in the said letter.
( 5 ) THE terms and conditions specified in the said letter are as follows:
"1]. Scope of work : hiring of earth moving equipments for removal and transportation of soil and loose blasted rejects above the SMS grade Limestone layer/bench in Ispat Limestone Quarry, Satna. The total estimated volume (in situ) of these materials to the handled during the period of 2 (two) years from the date of commencement of work will be 4,80,000 Cubic metres + 506. The materials are to be transported to specified Dump Yards/locations ranging in distance from 1k. M. to 4 K. M. 2]. Rates:. . . . . . . . . (A ). . . . . . . . . . . . (B ). . . . . . . . . . . . 3]. You will provide adequate nos of equipments - excavators and dump trucks - to ensure and maintain minimum monthly rate of 20,000 Cubic metres (in situ volume)4]. Failure in adhering to the monthly target, as mentioned at serial No. 3 above, will attract penalty @ 2% of the unit rates mentioned in Serial No. 2 (A) and 2 (B ). Penalty will accrue on the deficit quantity/volume as per monthly assessment and will be recovered from your bills at the end of each quarter. Within any quarter if deficit in a particular month is made up in the succeeding month/months, no penalty will be levied. In case of non-fulfilment of monthly target and recovery of penalty on the quarterly basis, any claim for waiver of penalty on the ground of deficit being caused by reasons beyond the control of the Contractor will be examined by Superintendent, ILQ of his authorized representative and finally decided/settled on merit of the case by the Zonal in-charge of ILQ, Satna. 5. Payment will be made on the basis of in situ measurement of volume of soil and blasted rejects removed and transported to the specified locations. 9. You will provide safety appliances all your workmen as prescribed in the Mines Act, and Rules framed thereunder. All other terms and conditions stipulated in the Tender Notice no. OMQ-Mining-1 of 1991 will apply to this contract. This work order will form a part of the contract to be executed by you. "
( 6 ) A contract was executed between the parties in terms whereof the respondent was required to lift at least 20,000 CBM per month.
( 7 ) SOME of the relevant terms of the contract are extracted hereinbelow for convenience.
"the Contractor shall be under obligation to: (i) provide such number of equipments in perfect working and running condition at all time as would be required by the manager, ILQ, Satna, to carry out the specified work within the time specified by him for the purpose ; (ii) bear all expenses of preventatives and operative maintenance of equipments including cost of spare parts, lubricants, garage charges etc; (iii) maintain sufficient number of equipments in perfect working condition to meet the working programme. . . . . . . . .
10. (a) Payment shall be made after submission of bills of the contractor accompanied with a certificate to the effect that the entire quantity of materials in respect of any individual Mining face has been pushed/transported to the specified dump yard. Such certificate has to be obtained from the Manager, ILQ, Satna or
