IMPORTANT POINT
An arbitral award must be based on valid evidence; reliance on vague and contradictory claims without proof is insufficient to uphold the award.

JUDGMENT :

Sabyasachi Bhattacharyya, J.

1. The present challenge has been preferred under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as, “the 1996 Act”) against an award passed by a three-member Arbitral Tribunal. The matter arises out of a claim made by respondent/claimant for insurance in view of loss suffered due to damage to cement bags stored for the purpose of its business by the respondent, due to waterlogging of its godowns.

2. Learned counsel for the petitioner/insurance company argues that the arbitral tribunal discarded two reports, one by the insurer's surveyor and another by an independent surveyor appointed by the court, and ultimately granted an award of Rs.60,00,000/- solely on the basis of Exhibit "T", which is a letter dated January 7, 2005 issued by the clamant/respondent to the present petitioner/insurance company. It is argued that the unilateral claim of the respondent does not comprise of proof of the claim and as such, the award is perverse.

3. Secondly, it is argued that the claim made in the letter dated January 7, 2005 was vague and contradictory. Although in the said letter a particular number of damaged cement bags were mentioned, of a much lesser amount than the claim made in its statement of claim, it was contended by the respondent/claimant that 2988 metric tonne (mt) cement was damaged.

4. Moreover, the claimant has made different claims insofar as the quantum of damages is concerned at various points of time, which are mutually contradictory.

5. Thus, it is argued that the claim should have been rejected due to lack of evidence.

6. Learned counsel for the petitioner submits that the tribunal based its findings on a co-ordinate Bench decision of this Court in Gambhirmull Mahabirprasad vs. The Indian bank Ltd and another reported at AIR 1963 Cal 163, where a quotation was used from Halsbury’s Laws of England, third edition. It is submitted that the entire quotation was not reproduced. Moreover, as per the said quotation, the court had the power to make a guess-work up to a certain extent only if the nature of the claim was such that it was not quantifiable, such as in respect of pain and suffering, loss of expectation of life, etc. In the present case, the claim was be adjudicated merely by calculating the number of damaged cement bags and the price thereof. Thus there was no scope of guess-work at all. Hence, the award is assailed on the ground of palpable illegality and patent perversity.

7. Learned counsel for the petitioner submits that this Court does not have the power under Section 34(4) of the said Act, to refer the matter to the tribunal for the purpose of re-writing an award, since the defect is incurable.

8. Learned counsel places reliance on the provision of Section 34(4) and cites I-Pay Clearing Services Private Limited vs. ICICI Bank Limited reported at (2022) 3 SCC 121 as well as Dyna Technologies Private Limited Vs. Crompton Greaves Limited reported at (2019) 20 SCC 1 where the Supreme Court consistently held that Section 34(4) could only be utilised when there was a gap in the reasoning process of the tribunal and not otherwise.

9. Thus, it is argued that the impugned award ought to be set aside.

10. Learned counsel for the respondents argues that in view of the materials available before the tribunal, the tribunal was justified in passing an award on the basis of the claim made by the respondent. It is submitted that the claim was contemporaneous with the loss and, as such, was a valid basis of the award.

11. Learned counsel submits that Gambhirmull’s case is apt on the issue and was rightly relied on by the arbitral tribunal.

12. In the absence of better evidence, the tribunal was justified in resorting to reasonable guess-work.

13. Learned counsel for the respondent next cites Muddasani Venkata Narsalah vs. Muddasani Sarojana reported at (2016) 12 SCC 288 for the proposition that where there is no effective cross-examination of the claimant's witness,