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2024 Supreme(Telangana) 1078
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
P. SAM KOSHY, N. TUKARAMJI, JJ.
M/s. Navarang Manufacturing Corporation - Appellant
Versus
The A.P. Backward Class Co-operative Finance Corporation Ltd. - Respondent
Civil Miscellaneous Appeal No. 3650 of 2004
Decided On : 19-09-2024
For the Appellants : Sricharan Telaprolu, T.V. Rajeevan
For the Respondents: K.V. Vani, A. Shanthan, Mohd. Yousuf
The court reaffirmed that under Section 34 of the Arbitration Act, courts do not interfere with arbitral awards unless there’s clear proof of error or misconduct, emphasizing the limited scope of review.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Appeal against order of setting aside arbitral award - Court confirmed negotiated price for tools was valid; finding by lower court was erroneous - Scope of interference in arbitral awards is limited; courts cannot reappreciate evidence - Appellant entitled to payment as per award. (Paras 8, 20, 25)
(B) The court addressed whether the district court acted as an appellate court and improperly reassessed evidence, resulting in an erroneous conclusion based on objections without substantial proof. (Paras 10, 11, 12)
Facts of the case:
The appellant manufactured tools for a government project, and after arbitration, the arbitrator awarded a payment that the lower court later set aside.
Findings of Court:
The appellate court found the lower court’s decision unsustainable and affirmed the arbitrator’s award.
Issues: The court examined whether the district court correctly evaluated evidence in setting aside the arbitral award.
Ratio Decidendi: The court emphasized that courts under Section 34 do not sit in appeal over arbitrators’ decisions unless significant errors are present, affirming the limited grounds for interference.
Result: Appeal allowed; the lower court's order is quashed, and the award is affirmed.
| Table of Content |
|---|
| 1. arbitration act application and facts of the dispute (Para 2 , 5 , 6 , 9) |
| 2. appellant's contention against the district court's decision (Para 10 , 11 , 12) |
| 3. negotiated price and lack of evidence (Para 15 , 17 , 18) |
| 4. limited grounds for setting aside arbitrator's award (Para 20 , 21 , 22) |
| 5. court's conclusion and order to affirm arbitrator's award (Para 25 , 26) |
JUDGMENT :
P. SAM KOSHY, J.
1. Heard Mr. Sricharan Telaprolu, learned counsel representing Mr. T.V. Rajeevan, learned counsel for the appellant; Ms. K.V. Vani, learned counsel representing Andhra Pradesh Backward Classes Cooperative Finance Limited for respondent No.1, Mr. A.Shanthan, learned Assistant Government Pleader attached to the office of the learned Advocate General, and, Mohd. Yousuf, learned Standing Counsel for the Telangana Backward Classes Finance Corporation for respondent No.3.
2. The present is an appeal filed by the appellant under Section 37 of the Arbitration and Conciliation Act, 1996 (for brevity ‘the Act’ hereinafter) challenging the order dated 09.02.2004 passed by the Chief Judge, City Civil Court, Hyderabad, in O.P.No.1521 of 2002.
3. Vide the impugned order, the Court below allowed the above O.P. filed by the respondent No.1 under Section 34 of the Act praying the Court below to set aside the award dated 22.04.2002 passed by the respondent No.2/Arbitrator.
4. The appellant herein was formerly a Corporation under the unified State of A.P. However, subsequent to the bifurcation of two States, the disputes now falls upon newly added respondent No.3 Corporation at Telangana.
5. The whole dispute in the instant case revolves around the supply of tools and equipment made by the appellant to respondent No.3 for the Backward Class Artisans Assistance Project so as to benefit the Backward Class Artisans in the erstwhile State of Andhra Pradesh under the scheme of “ADARANA” pursuant to an agreement dated 18.01.1999.
6. The appellant is a well established Company manufacturing tools and equipment (MONA brand) sewing machines and has an excellent track record in the market. For the purpose of implementing the scheme “ADARANA” for the benefit of Backward Class Artisans, the respondent No.1 issued an advertisement in the newspaper inviting firms, manufacturers and dealers. On the basis of the said advertisement, the appellant participated in the tender process and was found most eligible. Accordingly, an agreement was executed on 18.01.1999 and as per the said agreement the appellant was responsible to deliver the ISI marked tools and equipment at his own cost with installation facilities and also with the facility of providing proper training with free services and free replacement. The supply to be made was to all districts in the erstwhile State of Andhra Pradesh. Pursuant to the supply made, the appellant was entitled for an amount of Rs.2,09,89,631/- as on 31.12.1999 of which 50% had already been paid by respondent No.3 and the balance amount was to be paid to the appellant.
7. When the appellant raised the demand for the balance of 50% of the amount to the tune of Rs.1,04,34,934/- the respondent No.3 started raising objections on the rates quoted by the appellant alleging the price quoted to be exorbitant. There were meetings convened in this regard. However, no settlement could be arrived at and the amount stood pending unpaid to the appellant.
8. The objection primarily came from the District Collector, Khammam, who had furnished a rate quoted by one of the dealers in Khammam district and where the price quoted by the said dealer was said to be substantially less than the price quoted by the appellant for the supply made. Since there was such objection of huge price variation as alleged by the District Collector, Khammam, there was negotiation committee constituted of senior level officers of the State including the District Collector, Khammam, who had raised the objection for negotiating the price against the original price quoted of Rs
