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GUJARAT HIGH COURT
Hon’ble Mr. Chief Justice Bhaskar Bhattacharya & Hon’ble Mr. Justice J.B. Pardiwala
State of Gujarat and Another
Versus
Nitin Constructin Co.
First Appeal No. 1379 of 1992—Decided on 22/03/2013
Held :
In the present case, a contention as regards misconduct on the part of the artbitrator has been raised very vociferously. Such contention is based on the premise that the arbitrator had collected the entire fees from the respondent before completion of the arbitration proceedings, although, according to the terms of the agreement, the fees of the arbitrator and expenses were to be borne by both the sides equally.
[Para 18]
So far as the aspect of misconduct is concerned, it appears from the material on record that the directions for payment of fees and expenses were given to the appellant as well as the respondent herein by the arbitrator vide his letters dated 22nd June 1989 and 8th July 1989. It appears that inspite of such communication to the appellant, they failed to deposit their share of fees and expenses, as a result of which, when the respondent deposited the requisite amount of their share, they also deposited the amount towards the share of the appellant. As a result, in the final award, the appellant was directed to pay to the respondent, an amount of Rs. 10,600/- to be paid by the respondent to the arbitrator on behalf of the appellant towards arbitrator’s fees and expenses. [Para 19]
Court is of the opinion that in the facts of the present case, it would be difficult for Court to accept the contention of the learned AGP that the arbitrator has mis-conducted himself by accepting entire fees and costs from the respondent. [Para 20]
(b) Arbitration Act, 1940 (Central Act 10 of 1940) — Sections 30 & 39 — Award of arbitrator — Interference by Court — Scope — Indicated.
Held :
From the various decisions, it could safely be stated that:
(a) In the award, the arbitrator is not required to give reasons in detail.
(b) The award can be set aside only on the ground of error of law on the face of it, I.e. to say, if the award is based upon any legal proposition which is erroneous.
(c) The Civil Court has no jurisdiction to sit in appeal over the award and review the reasons assigned by the arbitrator and the award cannot be set aside merely because by process of inference and arguments it could be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion.
(d) The award cannot be interfered with even in the case where on an interpretation of any contract or documents, two views are plausible and the arbitrator accepts one view while the other view is more appealing to the Court.
(e) The award can be set aside by the Civil Court if the arbitrator has mis-conducted himself or the arbitrator has acted contrary to or gone beyond the terms of the reference. [Para 17]
It is now a well settled position of law that as the parties choose their own arbitrator, they cannot, when the award is good on the face of it, object to the decision either upon law or facts. Therefore, even when an arbitrator committed a mistake either in law or in fact in determining the matters referred to him but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award would not be liable to be set aside notwithstanding the mistake. Taking into consideration the settled position of law as stated above and having gone through the entire materials on record, we are of the view that the Court below duly scrutinized the evidence and has justifiably made award of the arbitrator the rule of the Court. With regard to the claims and question, the arbitrator has given elaborate reasons. Therefore, findings recorded by the arbitrator cannot be said to be either perverse or based on no evidence. In exercise of our powers under Section 39 of the Arbitration Act, it is not permissible for us to substitute the view of the Court below with our own opinion on appreciation of evidence. [Para 31]
(c) Arbitration Act, 1940 (Central Act 10 of 1940) — Sections 14, 17 & 30 — Limitation Act, 1963 (Central Act 36 of 1963) — Article 119 Clause B — Arbitration award — Objections raised by appellant — Non-consideration on premises that the same were time barred — Validity — Finding of — There is no dispute about the matter that only these objections which are raised within a period of 30 days shall be liable to be considered — In the instant case the objections raised by appellant after a period of 30 days were not considered — There is no illegality in order and object in this regard is rejected.
Held :
The Civil Court in the present case, took the view that the appellant first in point of time filed objections vide Exh.8 and the same were within the period of 30 days. The said objections were considered by the Civil Court and were rejected. The trial Court took the view that the objections which were filed on 13th January, 1992 were beyond the period of 30 days and such being the position the Court was not obliged in law to consider such objections. [Para 25]
It is discernible that on the mere fortuitous circumstances of the Court taking some time to pass a decree making the award rule of the Court, a right would not accrue to the applicant under Sub-article (b) to amend his objection petition and raise all sorts of new pleas and objections, after the period of 30 days, supportive of its claim to set aside the award etc. If such a course were to be permitted, it would transgress the salutary rule of limitation prescribed by the statute. [Para 28]
Law Laid Down :
An Arbitrator or umpire is under no obligation to give reasons in support of the decision unless under the arbitration agreement or the deed of submission he is required to give such reasons.
J.B. Pardiwala, J.—This Appeal under Section 39 of the Arbitration Act, 1940, is at the instance of the original respondent in proceedings under Section 14 of the Arbitration Act and is directed against the judgment and order passed by the learned Civil Judge (Senior Division), Mirzapur, Ahmedabad, dated 12th March, 1992, and thereby making the award of the arbitrator, the rule of the Court. The arbitrator awarded a sum of Rs. 30,01,01734 ps. (Rupees Thirty Lac One Thousand Seventeen and Thirty Four Paise only) in favour of the respondent herein original claimant, after adjusting the amount awarded towards the counterclaim of the State Government i.e. the appellant herein, to the tune of Rs. 2,45,358.66 ps.
2. The facts shortly stated may be summed up thus:
3. The appellant floated a tender for the work of manufacturing and supplying prefab precast blocks of M100 Class Mix CC of size 60x45x5 cms. for lining to canals of RBCD system of Karjan reservoir project. The tender was filled in by the respondent herein, who is engaged in the business of construction, and the tender of the respondent herein being the lowest, came to be accepted by the appellant under Agreement No. D/4 of 198182 of the Executive Engineer, I.P.Dn. No. 5, Rajpipla.
4. The accepted tender amount was Rs. 35,56,17204 ps. against the estimated cost of almost the same amount. The work order was issued on 26th March 1982, providing 18 months’ time period to complete the project. The work, however, was completed on 19th November 1986, for which required extensions for time limit upto 24th December 1986 were granted by the appellant without levying any liquidated damages. Thus, the additional period during which the project was completed was 37 months and 24 days.
5. In all, 30 RA bills were paid for the work to the tune of Rs. 33,40,311/. The last RA bill was paid on 23rd September 1986.
6. It appears that certain disputes with regard to the contract agreement cropped up between the appellant herein and the respondent, as a result of which the dispute was referred for arbitration, as the terms of the agreement provide for appointment of Arbitrator in the event of dispute between the parties. One Mr. M.H. Vakharia came to be appointed as the Sole Arbitrator by the parties on 17th February 1988 vide Memorandum No. KRJN/3987/1705/ 71/K of the Government of Gujarat, Irrigation Department, Sachivalaya, Gandhinagar, and after adjudicating the claims and counterclaims, the Arbitrator published his award on 30th July 1989 in presence of the parties. Thereafter, the sole arbitrator submitted the said award in the Court of Civil Judge (Senior Division), Ahmedabad (Rural), for making the award the rule of the Court. On submitting the award, the same came to be registered as Civil Miscellaneous (Arbitration) Application No. 150 of 1989.
7. The appellant herein filed objections against the award being Exh.8, under Section 30 of the Arbitration Act, 1940. The respondent herein filed its reply Exh.15 to the objections raised by the appellant. The appellant herein raised further objections vide Exh.22 dated 6th December 1991.
8. The trial Court adjudicated the objections against the award and made the award the rule of the Court. The trial Court passed an order that the respondent herein was entitled to recover Rs. 30,01,01734 ps. from the properties of the appellant with interest at the rate of 10% per annum from 16th July 1987 to 1st September 1988 and further interest at the rate of 17% per annum from 30th July 1989 till the date of drawing of decree of the requisite amount. The trial Court also awarded interest at the rate of 9% per annum from the date of order till realization of the amount.
9. The record further reveals that the respondent herein had filed an application under Sections 15 and 16 of the Arbitration Act, 1940, with a prayer to modify the award and grant interest pendente lite at the rate of 17% per annum. However, the said prayer was rejected by the trial Cou
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