IMPORTANT POINT
Appeal against arbitral award – Scope of jurisdiction under Section 34 and Section 37 of Act is not akin to normal appellate jurisdiction – Mere possibility of an alternative view on facts or interpretation of contract does not entitle courts to reverse findings of Arbitral Tribunal.

JUDGMENT :

Pamidighantam Sri Narasimha, J.

1. This appeal arises out of the decision of the Division Bench of the High Court of Bombay under Section 37 of the Arbitration and Conciliation Act 1996,¹[Hereinafter ‘the Act’.] by which the concurrent findings of the Arbitral Tribunal and that of the Single Judge of the High Court under Section 34 of the Act rejecting all claims were set aside and certain claims were allowed. This appeal by Konkan Railway Corporation Limited challenges the legality of the order passed by the Division Bench of the High Court while exercising jurisdiction under Section 37 of the Act.

2. The short facts relevant for the purpose of this appeal are as follows: The Respondent’s tender for construction of a bridge at KM 50/800, on the Katra-Laole section of Udhampur-Srinagar-Baramulla rail link, said to be the highest railway bridge in the world, was accepted by the Appellant, leading to the execution of the contract on 24.11.2004.

3. While the contract was in execution, disputes arose between the parties and through an agreement dated 28.02.2012, a Standing Arbitral Tribunal was constituted for resolution of disputes. The respondent raised 35 claims which were clubbed and classified as twelve disputes. The present proceedings arise out of the decision of the Arbitral Tribunal deciding three disputes, being Dispute I (relating to Claim 9), Dispute III (relating to Claims 12, 22 and 28), and Dispute IV (relating to Claims 13, 23 and 29).

4. The Arbitral Tribunal by its award dated 15.11.2014 considered the three disputes and rejected all the claims. The Respondent challenged the award under Section 34 of the Act. The Single Judge of the High Court confirmed the Award and proceeded to dismiss the challenge under Section 34 of the Act. The decision of the Single Judge of the High Court was appealed by the Respondent under Section 37 of the Act, and the Division Bench of the High Court, by the order impugned herein, partly allowed the appeal in the following manner. The Division Bench, while dismissing the appeal with respect to Dispute I, allowed the appeal with respect to the remaining two disputes (Disputes III and IV), and thereby set aside the concurrent findings as regards these disputes. As there is no controversy with respect to Dispute I, we are called upon to examine the legality of the order with respect to Disputes III and IV.

5. The facts relevant for Dispute III are as follows: The contract in favour of the Respondent was entered into on 24.11.2004. At that time the Notification of the Government of Jammu and Kashmir dated 19.12.2003 exempted Entry Tax on earth-moving instruments. However, during the execution of the contract, on 25.01.2008, the Government of Jammu and Kashmir withdrew the exemption notification. Consequently, the Respondent raised claims for reimbursement of Rs. 1,32,29,771/- incurred on account of payment of Entry Tax.

6. In so far as Dispute IV is concerned, it relates to reimbursement of Toll Tax on machinery and materials. As per the extant policy in Jammu and Kashmir, the Toll Tax as applicable on the date of the submission of tender, that is 31.05.2004, was Rs. 400/- per MT. However, through four subsequent notifications issued under Jammu and Kashmir Levy of Toll Tax Act, 1998, the taxes were progressively increased to Rs. 650/- per MT. Consequently, the Respondent raised a claim of Rs. 5,23,279/-, incurred on account of increase in toll tax during the subsistence of the contract.

7. Claims under Dispute III as well as Dispute IV were to be considered in terms of the relevant clauses of the contract, which are Clauses 5.1.2, 7.1.1, 7.1.2, and 11.7. These clauses are extracted hereinbelow for ready reference. Relevant part of Clause 5 of Chapter 5, titled ‘Sales Tax, Turn Over Tax/Local Tax, Duties etc’, is as under :

“Clause 5.1 Sales Tax/Turn Over Tax/Local Tax, Duties Etc.

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Clause 5.1.2 Sales Tax including turn over tax on works contract, octroi, royalty, toll tax, Duties/Le