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2018 Supreme(Guj) 257
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
AKIL KURESHI, A.Y. KOGJE, JJ.
KRISHAK BHARATI COOPERATIVE LIMITED - Appellants
Versus
S.R. TRAVELS & 1 - Defendants
FIRST APPEAL NO. 1084 of 2015
Decided on : 16-01-2018
Subject
Arbitration Law - SETTING ASIDE OF ARBITRAL AWARD
Act Referred
Headnote
Arbitration and Conciliation Act, 1996 – Section 34 –Appeal is filed challenging judgment of Additional District Judge, by which he rejected application of appellant filed under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the arbitral award – Held, Non-application of mind is a defect that is fatal to any adjudication – Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the Court or authority is taking – Requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian Law – Award of arbitrator directing the appellant to pay Rs.39,00,000/with interest is reduced to Rs. 1,00,000/with interest pendente lite as well as future interest – First Appeal Disposed of. (Paras 16, 17)
Advocate Appeared:
For the Appellant : MR MANISH BHATT, SR COUNSEL WITH MS MAUNA M BHATT
For the Respondent:MR P A MEHD, ADVOCATE
MR.JUSTICE AKIL KURESHI, J.
1. This appeal is filed by Krishak Bharati Cooperative Limited (“KRIBHCO” for short) challenging the judgment of the learned Additional District Judge, Surat, dated 11.05.2015 by which he rejected application of the appellant filed under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the arbitral award.
2. Facts are as under. The appellant-KRIBHCO desired to engage an agency for providing luxury buses for excursion of the employees and family members to various places in and around Gujarat. After inviting bids from interested tenderers, KRIBHCO awarded contract to the respondent-M/s. S.R.Travels, under a work order dated 29.10.2002.
Description of the work order was as under:
SR. NO.
DESCRIPTION
QTY.
UNIT RATE (RS.)
TOTAL AMOUNT (NOT EXCEEDING) (RS.)
01
HIRING OF 52/56 SEATER SEMI LUXURY BUSES OF 2000 AND ABOVE YEAR MODEL FOR EXCURSION TRIPS TO GUJARAT AND/OR ADJOINING STATES.
AS PER SOR
AS PER SOR
20,00,000-00
TOTAL VALUE
20,00,000-00
RUPEES TWENTY LACS ONLY.
3. The Work Order was valid for a period of one year from 29.10.2002 till 28.10.2003. The schedule or rates which formed part of the work order provided as under:
SCHEDULE OF RATES FOR HIRING OF 52/56 SEATER SEMI LUXURY BUS OF MODEL 2000 AND ABOVE FOR EXCURSION TRIPS TO GUJARAT AND/OR ADJOINING STATES.
Description
Rates
(A) Tour Route
Excursion trip to any destination in the State of Gujarat, Maharashtra, Rajasthan, M.P., Daman & Diu etc. for 600 Kms/1200 Kms for 2 days/4 days including journey time and can be extended for additional 3-4 days.
(B) Fixed lumpsum charges for 600 Kms journey for 2 days inclusive of journey timings & all related cost but exclusive of RTO Tax of other than Gujarat States.
Rs.8,700-00
(C) Fixed lumpsum charges for 1200 Kms journey for 4 days inclusive of journey timings & all related cost but exclusive of RTO Tax of other than Gujarat States.
Rs.16,800-00
(D) All inclusive Charges for extra Kms beyond 600 Kms/1200 Kms respectively. Payment is to be made on actual kms traveled beyond 600/1200 kms, subject to minimum 300 kms. per day basis beyond 2/4 days respectively.
Rs.14.10 per kms.
4. The work order also contained an attachment containing general terms and conditions, relevant conditions being the following:
“(e) Work Order means the Work Order to be issued by the Owner and accepted by the Contractor, and subsequent amendments agreed between the Owner and the Contractor, in writing.
11.0 The Contractor shall ensure disciplined behaviour and good conduct amongst its staff/workers inside the plant. If any one found violating the norms of discipline and good conduct the Contractor shall be liable to take disciplinary action for the same as per the provisions contained in Model Standing Orders under Industrial Employment (S.O.) Act 1946.
15. In case of failure on the part of the Contractor to complete the Work as per the scope of work defined in the Work Order, and/or failure to fulfill any of the terms and conditions of the Work Order, the Security Deposit of the Contractor shall be forfeited and remaining unexecuted Work shall be got done through another contractor at the risk and cost of the Contractor. All related cost incurred by the Owner on this account shall be recovered from the dues payable under this Work Order or any other dues of the Contractor.
16.1 The Owner, due to any reason whatsoever it may be, at any time by giving notice in writing to the Contractor, may terminate the Work Order.”
5. The work order also contained an attachment containing commercial terms and conditions, relevant portion of which reads as under:
“5.1 The quantities indicated in the Schedule of Rates are approximate only and may vary to any extent. The maximum ceiling
