IMPORTANT POINT
The main legal point established in the judgment is the distinction between conciliation and settlement efforts made by the arbitrator, emphasizing the encouragement of settlement efforts during arbitration and civil suits, and the interpretation of the provisions of the Arbitration and Conciliation Act, 1996.

JUDGMENT :

I.P. MUKERJI, J.

1. A point of some importance is involved in this appeal. By his judgment and order dated 20th April, 2022 the learned judge, Commercial Court at Alipore set aside the arbitral award dated 29th December, 2017 on the solitary ground that the learned arbitrator had taken part in a conciliation exercise between the parties. The merits of the matter were not gone into by the learned judge.

2. The arbitrator was the Hon’ble Mr. Justice Amitava Lala, a former judge of this court and of the Allahabad High Court. The award was for a sum of Rs. 1,54,86,728/- together with interest at the rate of 18% per annum from the date of the award till the date of payment. The counterclaim made by the respondent was rejected. There is no dispute that the learned arbitrator had made an endeavour to enable the parties to arrive at a settlement.

3. The effort which the learned arbitrator made towards settlement is recorded in the following words in the award:

“Settlement by Conciliation:

On 6th June 2017 as and when drawing of Award was for delivery excepting completion of formalities, respondent's representative Mr. Sunil Jha and Mr. Badri Kumar Tulsyan, working in a sister concern of the respondent approached the Arbitrator to get the disputes settled amongst the parties by way of conciliation when the representative of the claimant Mr. P.K. Rao, upon being present, wanted to obtain specific proposal of terms of settlement from the respondent and 3 to 4 months time to get final approval from the Board of Directors of the claimant company, who works or lives in different places. Accordingly the Arbitrator thought that no chance of settlement should be ignor ignored at any stage but to give appropriate opportunities to the parties. Thus by consent of the parties, the time was allowed by holding 61 sitting on 6th June 2017.

After expiry of considerable period, again by a letter dated 17th November 2017 with a copy to the claimant, the representative of the respondent approached the Arbitrator to hold a sitting for further discussion about settlement. Accordingly upon notice to the parties, the Arbitrator held 62nd sitting on 30th November 2017 when representatives of both the parties, upon being present, made their respective submissions. Mr. P.K. Rao was present on behalf of the claimant when Mr. Sunil Jha, Mr. Badri Kumar Tulsyan and Mr. Ashish Jha were present on behalf of the respondent. The main contention on the part of the respondent was that they are not supposed to pay the retention money when the work was foreclosed. For the payment of bill amount under claim no. 1, the respondent prayed time to pay by installments. As against the quarry of Mr. P.K. Rao, the representative of the claimant, for payment of interest, Mr. Sunil Jha, the representative of the respondent, flatly refused to pay any interest. It is significant to note there under that the approach of Mr. Sunil Jha was contrary to basic element of conciliation. On the other hand, the approach of Mr. Badri Kumar Tulsyan was quite cordial and genuine. Approach of Mr. Ashish Jha was similar to Mr. Tulsyan. Apparently Mr. P.K. Rao, the representative of the claimant, seemed to be unhappy with the approach of Mr. Sunil Jha. Mr. Tulsyan wanted to control the damage but it became uncontrollable by such time.

In any event, I approached Mr. P.K. Rao, representative of the claimant, to take time and think rationally thereafter come back on a date to be fixed by the Arbitrator.

However, on 8th December 2017 the claimant wrote a letter to the Arbitrator with a copy to the respondent saying that the management of the claimant has duly considered the offer made by the respondent and hereby expresses its inability to accept such offer for settlement. Thus the Arbitrator cannot compel them to accept the proposal made by the respondent.

Hence, the settlement by way of conciliation in terms of Section 30 of the Arbitration and Conciliation Act, 1996 stands failed. The minutes of 61st