Himachal Pradesh Tourism Development Corporation vs M/S Modern Sanitary Engineers

Jyotsna Rewal Dua, J

Learned Single Judge did not find any merit in the Arbitration Case No. 52 of 2007 filed under Section 34(3) of the Arbitration & Conciliation Act 1996 (in short the Act) by the Himachal Pradesh Tourism Development Corporation (HPTDC) against the award passed by the learned Arbitrator on 26.09.2007 as supplemented on 04.07.2011. The Arbitration Case was dismissed on 01.07.2013. Taking exception to this judgment, the HPTDC has filed this Arbitration Appeal under Section 37 of the Act.

Brief reference to the facts leading to filing of instant appeal may be made :-

2(i) A notice dated 29.07.2002 was served by the respondent upon the appellant-Corporation that despite completion of the work awarded to it, on 31.10.1999, the payments due to it had not been released. A request was made to appoint an Arbitrator for adjudicating the dispute between the parties.

2(ii) In Arbitration Case No. 69 of 2002 filed by the respondent under Section 11(6) of the Act, a retired Chief Engineer was appointed as Arbitrator by the Court on 14.03.2003. However, in view of the request made by the Arbitrator, so appointed, the order dated 14.03.2003 was modified on 09.07.2004 by appointing another retired Chief Engineer as the sole Arbitrator in place of the earlier appointed Arbitrator.

2(iii) The Arbitrator entered upon the reference. The award was announced on 26.09.2007. The respondent/claimant had claimed following amount in its claim petition.

“Claim No. 1 : On account of payment of the final bill for Rs. 8,00,000/-.

Claim No. 2 : On account of release of Security Deposit, for an amount of Rs. 1,00,000/-.

Claim No. 3 : On account of damages for the prolongation of the work for an amount of Rs. 4,32,000/-.

Claim No. 4 : On account of payment of price escalation, for an amount of Rs. 2,62,724/ -.

Claim No. 5 : For allowing interest @ 24% on all the claims 1 to

4 with effect from 30.04.2000 till date of payment.”

In the present appeal, learned counsel for the appellant has confined his submissions only to the amount awarded by the Arbitrator under claim No. 1. Hence, discussions made hereafter are only in reference to claim No.1.

2(iv) The Arbitrator in his award dated 26.09.2007 allowed a sum of Rs. 5,13,312/- to the respondent under Claim No.1.

The appellant assailed the award dated 26.09.2007 before this Court in Arbitration Case No. 52 of 2007. The appellant’s main objection was that though the claim of the respondent was initially for a sum of Rs. 4,00,000/-, but it was enhanced to Rs. 8,00,000/- in the claim petition. This, according to the appellant, was not permissible. It was contended that the learned Arbitrator had not given reasons in the award for coming to the conclusion that under Claim No.1, the claimant was entitled to a sum of Rs. 5,13,312/-.

2(vi) Learned Single Judge while deciding the Arbitration Case found substance in the plea of the appellant/objector that Arbitrator had not given reasons for arriving at the conclusion that the claimant was entitled to a sum of over Rs. 5,00,000/- for claim No.1. For that reason, vide order dated 11.09.2009, the award was remitted back to the Arbitrator under Section 34(4) of the Act for giving reasons in support of findings on claim No.1.

2(vii) In compliance to the directions passed in Arbitration Case No. 52 of 2007, the Arbitrator again held proceedings and on 04.07.2011 supplemented his award dated 26.09.2007 by recording following reasons :-

“In compliance to the orders of the Hon’ble H.P. High Court, I give the reasons as under :-

At the time of making the Award, I had examined the statement of the claimant in which he had claimed a sum of Rs. 6.39 lacs a shown in Annex. C6 (page 291 of the arbitration file). I also found that the claimant, with his letter dated 18.3.99, did not provide rate-analysis for the item of ‘built-up steel’, to which the respondent had objected. Therefore, I considered it appropriate not to allow the amount (Rs. 55,986.00) claimed for this ‘built-up steel’ item of work and rejected this item.

In the same statement, there were other items, like ‘1/2 brick masonry’, ‘brick masonry in foundations’, ‘brick masonry in super-structure’, ‘shutters with laminated board’ and 1.25 mm thick HB sheets, for which the clamant did not provide analyses of rates with his letter dated 3.4.99. The total amount claimed under all these items works out as Rs. 69,469.47. The respondent had denied the receipt of claimant’s letter dated 3.4.99 and in the absence of specific admission by the respondent, I had decided not to allow these items.

By disallowing all the above items, the balance amount payable to the claimant became Rs. 5.13 lacs (against claimed amount of Rs. 6.39 lacs) and after rounding off this figure, I awarded an amount of Rs. 5.00 lacs under claim No.1.”

2(viii) The appellant Corporation, not satisfied with the reasons assigned by the Arbitrator, again assailed the award before the learned Single Judge. The learned Single Judge did not find favour in the challenge laid by the appellant. The Arbitration Case No. 52 of 2007 was finally dismissed on 01.07.2013. Aggrieved, the HPTDC has now invoked Section 37 of the Act in the instant appeal.

The points urged by learned counsel for the appellant- Corporation are that firstly, the respondent-claimant having served notice upon the appellant-Corporation for claiming a sum of Rs. 4,00,000/- under claim No. 1 could not have enhanced its claim to Rs. 8,00,000/- before the Arbitrator and secondly, that the award passed by the Arbitrator allowing a sum of Rs. 5,13,312/- in favour of the claimant under claim No. 1 is without any reason and contrary to clause 12 of the Arbitration Agreement. The learned Senior Counsel for the respondent-claimant defended the impugned award passed by the Arbitrator.

We have heard learned counsel on both sides and considered the case record. Our observations in the matter are as under :-

4(i) It is well settled that the Court cannot sit as an appellate authority to re-appreciate the evidence led by the parties before the Arbitrator. The Arbitrator is the final Arbiter for the dispute between the parties. It is not open to challenge the award on the ground that the Arbitrator has drawn his own conclusion or has failed to appreciate the facts. The Court cannot substitute its own evaluation of the conclusion of law or facts to come to the conclusion that the Arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid, is a decision within the competence of the Arbitrator. By purporting to construe the contract, the Court cannot take upon itself the burden of saying that this was contrary to the contract and as such beyond jurisdiction. Where the reasons have been given by the Arbitrator in making the award, the Court cannot examine the reasonableness of reasons. If the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of evidence. 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. [ see: 2018 (16) SCC 219 Oswal Woollen Mills Limited Vs. Oswal Agro Mills Limited].

4(ii) In the instant case, the Arbitrator has recorded reasons for allowing claim of Rs. 5,13,312/- to the respondent under claim No. 1. The Arbitrator has noted that according to the parties, there was no dispute with regard to the quantity executed at the site except about the market rate payable for various items. The respondent’s plea was that it had submitted its rates to the appellant-Corporation with proper analysis of rates, but the appellant kept on paying lower rates, terming such rates as payable market rates. The Arbitrator in his award dated 26.09.2007 noticed contract clause 12-A relied upon by the appellant which read ; “in case if contractor fails to lodge claim supported by proper analysis of rates in respect of such quantities in excess of the deviation limit, the rates quoted by the contractor for individual items shall be binding beyond deviation limit.” The Arbitrator found that appellant had not taken timely action to reject the rates demanded by the respondent-claimant. That the respondent-claimant continued to carry out the work on the presumption that the rates demanded by it were genuinely payable and deemed to have been accepted by the appellant. The Arbitrator allowed a claim of Rs. 5,08,465 + 4,847 = 5,13,312/- to the respondent against claimed amount of Rs. 8,00,000/- under claim No. 1. Pursuant to directions of the Court, the Arbitrator on 04.07.2011 gave further reasons in support of award dated 26.09.2007. On the plea of the appellant that the respondent had not given proper rate analysis, the Arbitrator held that the respondent in its letter dated 18.03.1999 did not provide rate analysis for the items of ‘built up steel’ to which the appellant had objected to. For that reason, an amount of Rs. 55,986/-claimed for the ‘built up steel’ was not allowed. Similarly, certain other amounts claimed by the respondent were not allowed as the appellant had objected to the rates quoted by the respondent of other items at the relevant time. The Arbitrator held that by disallowing these specific items, where contractor’s quoted rates were objected to by the appellant, the balance amount payable to the respondent became Rs. 5,13,312/-. The award passed by the Arbitrator cannot be said to be unreasoned award.

4(iii) Learned counsel could not substantiate his other plea that the respondent was debarred from claiming an amount of over Rs. 4,00,000/- merely because in the notice seeking appointment of Arbitrator and in the application made under Section 11 of the Act, Rs. 4,00,000/- was mentioned as the amount due to it. Notice seeking appointment of the Arbitrator need not even quantify the amount claimed. It is well settled that an application under Section 11 of the Act need not set out in detail the disputes or the claims and may briefly refer to the subject matter or broad contours of the dispute. It is not in dispute that the respondent in its claim made before the learned Arbitrator had claimed Rs. 8,00,000/- under Claim No. 1. After consideration, this claim was allowed by the Arbitrator for Rs. 5,13,312/-.

4(iv) There is no error apparent on the face of record/award, which can be said to be falling under any one of the exceptions carved out under the provisions of Section 34 of the Act. The learned single Judge did not commit any error in dismissing the Arbitration Case instituted by the appellant.

For the aforesaid reasons, we do not find any merit in this appeal and the same is accordingly dismissed. Pending applications, if any, also stand dismissed.