Coal India Ltd. vs Coal Linkers Ltd.

Satyabrata Sinha, J.—This appeal arises out of a judgment and order dated November 3, 1995 passed by a learned single Judge of this. Court whereby and where under an application filed by the Appellant under Sections 30 and 33 Arbitration Act, 1940 was rejected. The fact of the matter is as follows:

A notice inviting tender was issued by the Appellant for transportation-cum-Dump operation in 198,1 pursuant whereto the Respondent quoted its offer by its letter dated October 20, 1991. The said offer was accepted by the applicant on July 6, 1982 and a formal agreement was entered into for transportation-cum-dump operation (composite job) at Kanpur on August 28, 1982 which contained an arbitration clause. The said arbitration cause reads thus:

In the event of any dispute or difference arising out of or in connection with this agreement, the same shall be referred to the sole Arbitrator to be appointed by the Chairman or Chief C.M.C. of the Company, whose decision shall be final and binding on the parties.

The said contract of the first instance was for handing 5000 M.T. Steam Coal per month. The Respondent after completing the formalities as mentioned in the said contract duly started the said work of transportation-cum-dump operation of coal through Kanpur Stockyard.

On or about July 13, 1983 an interim agreement modifying Clauses 40, 41 and 42 of the said agreement dated August 28, 1982 was entered into by the parties thereto. On May 22, 1984 the Respondent was awarded the job by insurance of a work order of handling rail borne by the Appellant, the rates wherefore was mentioned at Rs. 28.65 per M.T. including the charges for supervision, transit shortage, unloading/re-loading supervision,, transportation, but excluding octroi charges. There exists a dispute as to whether by reason of said work order a concluded contract was arrived at or not. However, the aforementioned agreement dated August 28, 1992 and subsequent interim agreement dated July 13, 1983 were extended from time, to time.

On July 16, 1995 a formal agreement was sent to the Respondent fixing the rate at Rs. 28.65 per M.T. but the Respondent sent back the same upon inserting a clause therein to the effect that they were signing the agreement subject to CI. 26 which was to the effect of subject to their claim for proportionate increase in rates from January 8, 1984 as referred to Coal India Limited, and also subject, to terms and conditions set out on the body of the work order No. CIL:RSM:IMO:PR:SER:84:2405-8 dated May 23, 1984 while accepting it on May 23, 1984. The Appellant, however, stated that they accepted the agreement without clause 26, and the matter of proportionate increase in the handling rates with effect from April 8, 1984 was being dealt with separately and the decision of CIL, Head Quarters should be communicated in the course.

On August 13, 1995 the Appellant stated that no deviation would be made from the said agreement and the CI. 26 inserted therein will not be applicable and binding.

Disputes and differences having arisen between the parties, the Appellant formed a committee known as ''Wadhawan Committee'', pursuant whereto a report was submitted as regards claim made by the Respondent and in terms thereof the Appellant offered to pay a sum of Rs. 11,98,332.98p. as a package deal.

By a letter dated December 3, 1986 addressed to the Respondent, the Appellant stated:

We have been informed by our H. Qrs. that your claims on various counts have been settled as under:

Payment of Rs. 36.50 per tonnes for handling rail borne consignments during period 15.10.1983 to 22.05.1984. claims has been accepted by the Company.

Proportionate increase in rail handling rates with effect from 08.01.1984 due to increase in coal price.

The company has agreed that recovery for transit shortage be done on pre-revised rates i.e. rates before 08.01.1984 for all rates upto 25.01.1986.

Compensation for shortfall in weighment. Claim has not been accepted.

Payment of fixed expenses.

It has been decided to pay @ Rs. 3.80 per tonne for the period August 1985 to April 1986 on the average monthly quantity handled by you during the period 15th July, 1983 to 31st July, 1985 to less quantity handled during the above period i.e. August, 1985 to April, 1986.

Damages suffered on account of suspension of supplies from August, 1985 to January, 1986.

Claims has not been accepted.

Claim in respect of additional plot.

It has been agreed to pay @ 0.94 paise per sq. yards from the August, 1983 upto March 1986.

The Respondent alleged that the Appellant made only partial payment whereas according to the Appellant, the Respondent accepted the said payment without any demur and thus are bound thereby. However, by a letter dated December 23/29, 1986 the Appellant informed the Respondent that the payment made by the Appellant was in full and final settlement against the claim of the Respondent. The Appellant thereafter constituted another committee on August 28, 1988 known as T.K. Deb Committee for the purpose of review of the recommendations made by the said Wadhawan Committee and to submit a report with regard thereto which was done by the said Committee in terms of its report dated August 29, 1988.

On November 20, 1989 the Respondent pointed out to the Appellant that apart from the agreement dated August 28,1982 as modified on July 13, 19?3 there was no other agreement. The Appellant, however, extended the contract till March 31, 1990 which was again extended upto November 30, 1990 by a letter dated June 12, 1990.

Disputes and differences having arisen between the parties; Sri B.R. Prasad, Ex-Chairman-cum-Managing Director of Bharat Cooking Coal Ltd., was appointed as an arbitrator by the Appellant in terms of letter dated August 8/13, 1990. Before the sole arbitrator statement of claims and counter-claims were filed by the parties. However, both the parties agreed to enlarge the scope of arbitration proceedings so as to enable the arbitrator to resolve ali disputes and differences and claims between the parties upto March 31, 1991 where after supplementary statements of claims were filed by the parties. The Respondent prayed for an award for a sum of Rs. 2,88,067.60 Ps.; whereas the Appellant submitted a counter claim for a sum of Rs. 44,74,733.81 Ps. The parties agreed before the learned Arbitrator to dispense with the oral evidence unless so directed by the Arbitrator.

On or about June 20, 1991 the parties also agreed to appoint M/s. B.S. Murthy & Associates for submitting a report covering:

Reconciliation of amount claimed by the claimant under different heads with reference to basic records, bills and accounts etc. of the parties including the amount paid to-be withdrawn against the bills.

Reconciliation of amount claimed in the supplementary counter statement of facts/claims of Coal India Ltd., with reference to accounts, claims and other relevant records along with the basis of computation of claim.

The said M/s. Murthy & Associates submitted their report on August 14, 1991 ; a written objection whereto was filed by the Appellant.

The impugned award was made on April 30, 1993 where against the aforementioned application for setting aside the award was filed by the Appellant on June 14, 1993. By reason of the impugned judgment dated November 3, 1995 the learned trial Judge dismissed the said application.

Mr. Jayanta Mitra, the Learned Counsel appearing on behalf of the Appellant, inter alia, submitted:

Wadhawan Committee''s report being a tentative one, the same could not have been relied upon by the learned Arbitrator in view of the fact that another committee was constituted by the Appellant, namely, Sri T.K. Deb Committee which submitted its report. Non-consideration of the latter report by the learned Arbitrator has, therefore, vitiated the award.

By reason of the order dated 20th June, 1991 M/s. Murthy & Associates were only asked to submit a report for a limited purpose and thus they could not have entered into the merit of the matter, as such a power was not and could not have been conferred upon it by the Arbitrator.

The damages claimed under Clauses (d) and (f) were overlapping and the learned Arbitrator has misconduct himself in awarding the same twice over and thus there exists an error apparent on the face of the award.

in absence of issue in respect of the alleged claim for a sum of Rs. 22,20,306.56 Ps. claimed by the Respondent towards service charges for stock operation, no award could be made in relation thereto and that too upon taking into the consideration the figure from Murthy''s report, 5. In any event no award, therefore, would be made in view of acceptance by the Respondent of the amount of Rs. 11,98,332.98 ps. in full and final settlement of all dues by way of a package deal in terms of Wadhawan Committee''s report, the Respondent was not entitled to claim any further amount, in any event as the parties referred their disputes and differences to Arbitrator, the report of the Wadhawan Committee became irrelevant, and thus, the same could not have relied upon. The sole Arbitrator merely relied upon the report of M/s. Murthy & Associates and did not apply his own mind and this mis conducted himself and the proceedings.

The Arbitrator has not looked into the material documents being document dated 16th July, 1985.

Mr. Mitra, the Learned Counsel, in support of his aforementioned submissions relied upon the following decisions: on K.P. Poulose Vs. State of Kerala and Another, , Continental Construction Co. Ltd. Vs. State of Madhya Pradesh, Punjab State and Anr. v. Chander Bhan Harbhajan Lai and Anr. AIR 1964 Pun.424 and Ramtaran Das Vs. Adhar Chandra Das and Others, .

Mr. Anindya Mitra, the Learned Counsel appearing on behalf of the Respondent, firstly submitted that the award is not a speaking and reasoned order and thus this Court should not interfere therewith. Reliance in this connection has been placed on Jajodia (Overseas) Pvt. Ltd. Vs. Industrial Development Corporation of Orissa Ltd.,

Mr. Mitra would urge that this Court''s jurisdiction is limited and thus, it cannot examine the correctness of the award on merits nor. can it sit in appeal over the award. Reliance in this connection has been placed on Puri Construction Pvt. Ltd. Vs. Union of India (UOI), and Coimbatore District Podu Thozillar Samgam Vs. Balasubramania Foundry and Others, .

In any event Mr. Mitra would urge that the reasonableness of the reason given by the Arbitrator cannot be questioned and in support of the aforementioned proposition reliance has been placed on Sudarsan Trading Co. Vs. Government of Kerala and Another,

It was submitted that copies of the report of T.K. Deb Committee and the document dated July 16, 1985 were produced by the Appellant before the Arbitrator. The Learned Counsel contends that the maxim delegates non-protest delegare upon which the Appellant has relied upon has no application as M/s. Murthy & Associates were appointed by consent and the said report is admissible in terms of the proposition laid down u/s 65(g) of the Evidence Act..

The Learned Counsel contends that as the Evidence Act has no application in relation to Arbitration Proceedings; the question of legality or admissibility of evidence cannot be raised before the Arbitrator. According to the Learned Counsel, as the Appellant has not applied for cross-examination Murthy before the Arbitrator, no illegality has been committed.

The only question which arises for consideration in this appeal is as to whether the learned Arbitrator has misconduct himself the proceedings and/or whether there exists any error apparent on the face of the records.

A bare perusal of the award will show that the learned Arbitrator has taken into consideration the respective claims of the parties and have framed issues in respect thereof. The learned Arbitrator in his award has taken note of the submissions made by the parties before him and answered the same While answering such issues, however, he did not assign any reason nor has referred to any note or document which may be said to have formed part of the award.

In this situation it cannot be said that the award is a reasoned one.

In Jajodia Pvt. Ltd. v. Industrial Development Corporation of Orissa Ltd.(Supra) the Apex Court stated the law thus ;

It is, we think, necessary first, to clear some cobwebs. A speaking or reasoned award is one which discusses or sets out the reasons which led the Arbitrator to make the award. Setting out the conclusions upon the questions or issues that arise in the arbitration proceedings without discussing the reasons for coming to these conclusions does not make an award a reasoned or speaking award. The Arbitrator has in the award before us only answered the issues that were framed. He has not discussed or set out the reasons for the answers. The award is, therefore, not a speaking or reasoned award.

In Sudarsan Trading Company v. The Government of Kerala and Anr. (Supra), para. 29 is stated:

29....in the instant case, the Arbitrator has merely set out the claims and given history of the claims and then awarded certain amount. He has not spoken his mind indicating why he has done what he has done; he has narrated only how he has come to make the award. In the absence of any reason for making the award, it is not open to the Court to interfere with the award.... The Arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the Court to take upon itself the task of being a judge on the evidence before the Arbitrator....

In view of the aforementioned decisions there cannot be any doubt that the award in question is not a reasoned award. As the award is not a reasoned order, the question of there being error on the face of the award would not arise.

In any event in Municipal Corporation of Delhi Vs. Jagan Nath Ashok Kumar and Another, the Apex Court has held that reasonableness of the reasons given by the Arbitrator in making his award cannot be challenged.

The only question which, therefore,, arises for consideration is as to whether the learned sole Arbitrator has misconduct himself or the proceedings

So far as the appointment of M/s. Murthy & Associates is concerned, evidently the same was done on the request of both the parties in order to expedite the proceedings. It is, therefore, not a case where the Arbitrator has delegated his power. The maxim delegatus non-protest delegare has no application in the instant case as such power of delegation has been conferred upon M/s. Murthy & Associates by agreement of the parties themselves. It is true that an arbitrator, generally speaking, cannot delegate his duties as has been stated in Russal in Arbitration, 20th Edn., at page 228. In the instant case the only question which arises for consideration is as to whether M/s. Murthy & Associates had exceeded the scope and purpose of the reference made to him which was confined to reconciliation of the amounts claimed by the Respondent under different heads and the counter claim of the Appellants.

However, it appears that both the parties submitted their documents before M/s. Murthy & Associates and in relation to some items, the Respondent in order to expedite the process relied on the entries in the account books maintained by the Appellant itself. The award does not show that the learned Arbitrator has passed his. award on the basis of the said report itself. The parties made independent submissions on the basis of the materials on records.

The award clearly demonstrates that the learned Arbitrator has considered the objections raised on behalf of the Appellant and arrived at a finding and nothing had been pointed out to us which could be said to be prejudicial to either of the parties. The report was submitted by M/s. Murthy & Associates upon taking into consideration the documents filed by the parties for the purpose of reconciliation of the claims and counterclaims.

It is not disputed that the question as to whether the said report of M/s. Murthy & Associates was admissible in evidence or not and/or to what extent, if any, fall within the exclusive domain of the learned Arbitrator. Had the learned Arbitrator relied solely upon the report and passed an award annexing a copy of the same therewith, the matter would have been different.

It is accepted at the Bar that the learned Arbitrator had not agreed with the report in its entirety and thus it cannot be said that the learned Arbitrator did not apply his mind as regards the legality, correctness or otherwise of the said report. The said report, in our opinion, would certainly be looked into as a part of the words.

The Learned Counsel has taken us through the Wadhwan Committee''s Report and from the said report it appears that attempts had been made by it to keep its report within parameters of the work allotted to them. If, assuming for the sake of argument, it had gone beyond the task assigned to him in respect of some of the matters, the learned Arbitrator could take notice thereof and ignore the same or accepted only that part which was in consonance with the reference. The report of M/s. Murthy & Associates was only one of the materials and admittedly the award is not based on the said material alone. It is pertinent to note that in para. 4 of the written objection, the Appellant inter alia, has alleged as follows:

Therefore, admittedly the basis of the report of M/s. Murthy & Associates is the records of CIL only and not of M/s. Coal Linkers. In other words, Coal Linkers did not produce any of its records in the Statement of Claim/Supplementary Statement of Claim for reconciliation of the amounts allegedly claimed by them.

The said report could certainly be looked into as a part of the records together with the other relevant documents. It is pertinent to note that the parties dispensed with the oral evidence. If the Appellant intended to cross-examine the maker of the report it could do so but except filing written objection no such application was filed.

It may be true that the Wadhwan Committee''s report was made by way of a package deal and the same was not binding upon the Appellant in as much as a subsequent committee was constituted known as T.K. Deb Committee1. But the question Which arises for consideration is as to whether the report is based on Wadhwan Committee''s report only. The answer to the said question must be rendered in negative. Before the learned Arbitrator, the Appellant has placed the reports of both Wadhan Committee as also the T.K. Deb Committee. None of the aforementioned reports were conclusive by itself. It was for the learned Arbitrator to arrive at his own independent decision, upon or without taking into consideration the said reports. It, however, in our opinion, would not be correct to contend that the learned Arbitrator for the purpose of arriving at his award could not have considered the Wadhwan Committee''s report so as to enable him to come to the decision as to what rate should be applicable in respect of the work done by the Respondent.

As the award is a non-speaking award, this Court is not in a position to decide as to whether the T.K. Deb Committee''s report was at all looked into or not. It is not the function of this Court to probe into the Arbitrator''s mind.

So far as the submission of the Learned Counsel to the effect that CI. (d) and (f) of the Statement of Claim is concerned, the same were overlapping the said question does not appear to have been raised before the learned Arbitrator and/or before the learned Trial Judge. In any event whether the said claims were overlapping or not also fell within the jurisdiction of the learned Arbitrator. this Court, in our opinion, has no jurisdiction to go into the merit of the matter unless the same is apparent on the face of the records. Such is not the case here.

In Sudarsan Trading Company v. The Government of Kerala and Anr. (Supra), the Apex Court held:

In light of the above, the High Court, in our opinion, had no jurisdiction to examine the different items awarded clause by clause by the Arbitrator and to hold that under the contract these were not sustainable in the facts by the Arbitrator.

In Bijendra Nath Srivastava (Dead) through LRs. Vs. Mayank Srivastava and others, the apex Court referring a large number of decisions, inter alia, held:

It is settled law that it is not open to the Court to reduce reasons in the award or in the record accompanying the award and proceed to examine whether those reasons were right or erroneous.

In Coimbatore District Podu Thozillar Samgam v. Bala Subramania Foundry and Ors. (Supra), it was held that an award can be set aside where there is an error on its face. Further it is an error of law and not mistake of fact committed by the arbitrator which is justiciable in the application before the Court. It is an error of law and not mistake of fact committed by the arbitrator which is amenable to corrections by the Court.

In Purl Construction Pvt. Ltd. v. Union of India (Supra), Sharma (as the learned Chief Justice then was) held that while exercising its jurisdiction u/s 30 of the Arbitration Act the Court does not sit in appeal and examine the award on merit.

In Food Corporation of India Vs. M/s. Veshno Rice Millers, it was held that when the Arbitrator has taken a plausible view the Court has nothing to examine beyond the same.

Recently the Apex Court in State of U.P. Vs. M/s. Ram Nath International Const. Pvt. Ltd., held that the jurisdiction of this Court to interfere with the award is a limited one and it was not open to the Court to reassess the evidence.

So far as the submission of Mr. Jayanta Mitra to the effect that no issue had been framed as regards the claims of a sum of Rs. 22,20,306.56 Ps. is concerned it appears that there is no force therein in. as much as while considering the claim of the claimant, the said sum has been taken into consideration para. 2.021-D of the award. The said issue, in my opinion, might have been considered along with other issues. No such question also appears to have been raised before the learned Trial Judge. It may, however, be noticed that the learned Arbitrator had made the awards according to the issues framed as would be evident from para. 7 of the said award. The learned Arbitrator has held that only the claims of the claimant in respect of the handling charges fixed expenses and plot rent are In dispute and there is no dispute between the parties in regard to the amount payable to the claimant on account of the reimbursement of railway freight, reimbursement of octroi payment and charges for handling railway board consigning a sum of Rs. 28,36,772.61 Ps. has been awarded and thus the Appellant cannot raise any grievance as regards to the said amount.

As regards the question that the Respondent having accepted the entire amount of Rs.11,98,332.92 Ps. by way of package deal in terms of Wadhwan Committee''s report could not lay any further claim, in my opinion, the same is apparently not correct in view of the fact that the parties themselves agreed to refer their disputes and differences to an arbitrator. The learned Arbitrator has taken this aspect of the matter into consideration in his award. The question as to whether the report of the Wadhwan Committee became irrelevant or not cannot be a subject matter of the decision of this Court in as much as the said report being a piece of evidence could have been taken into consideration by the learned Arbitrator.

It is also not correct to say that the learned Arbitrator has not looked into the document dated July 16, 1985. Evidently the Respondent did not agree to accept the said agreement unconditionally. It was returned back by the Respondent inserting a clause being Clause No. 26. The parties were, therefore, not ad-i-dem so far as the condition of the said agreement is concerned. In that view of the matter, the Arbitrator was entitled to frame an issue as to whether the said agreement was binding on the parties or not and in that view of the matter the decision of the Supreme Court in K.P. Poulose Vs. State of Kerala and Another, cannot be said to have any application, in the instant case. In that decision the Supreme Court held that where the award on the face of it is inconsistent and the material documents were ignored, the arbitrator must be held to have misconduct the proceedings. However, in the instant case the question which specifically fell for decision on the learned Arbitrator as to whether the said agreement could be said to be a binding agreement has been answered by the learned Arbitrator.

In Continental Construction Co. Ltd. Vs. State of Madhya Pradesh, the Supreme Court was considering a claim of price escalation which was found to be barred under the specific clauses of contract. In that case the District Judge himself framed issues and referred the matter to the Arbitrator. The award was set aside upon looking to the terms of the contract. The aforementioned decision, therefore, has also no application to the fact of the case.

Mr. Jayanta Mitra, Learned Counsel had also relied upon Ram Chandra Brij Lal Vs. Manohar Das Ram Prasad, but in view of my findings aforementioned the said decision does not appear to have any relevance.

In Punjab Province v. Dr. Lakshmi Das 1944 Lah. 143 it was held that the award is vitiated when no evidence is recorded. In the instant case, parties relied upon documentary evidence. In thai case also, it was held that correctness or reasoning of the award cannot be questioned.

In Punjab State and Anr. v. Chander Bhan Harbhajan Lai and Anr. (Supra) upon which Mr. Mitra has placed reliance upon ; a learned Single Judge in the fact of the case held that the Arbitrator did not decide vital issues but left the decision to the Chief Engineer and thus the award given by them suffers from a serious infirmity. Such is not the position here as the learned Arbitrator did not delegate his jurisdiction in favour of M/s. Murthy & Associates. In fact the said firm of Chartered Accountant was engaged with the consent of the parties.

In Ramtaran Das v. Adhar Chandra Das and Ors.(Supra) the work of valuing the agricultural land and making allotment being the job of the Arbitrator, the same cannot be done by the Surveyor and in that situation it was held that the Arbitrator''s proceedings were not properly conducted. Such is not the position here.

Furthermore, no desire was expressed by either party for production of any person tor cross-examination or that any document be strictly proved. The party cannot sit back on an objection during the hearing before Arbitrator and raise it later after finding himself faced with an adverse award.'' 54. In this view of the matter the judgment of the learned Trial Judge, in our opinion, does not suffer from any error warranting interference by this Court.

For the reasons aforementioned we do not find any merit in this appeal which is accordingly dismissed but in the facts and circumstances of this case there will be no order as to costs.

Satya Narayan Chakraborty, J.

I agree.