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Judgment
K.L. Manjunath, J.—The appellant is questioning the legality and the correctness of the award passed by the Arbitral tribunal dated 13th May, 2005 passed by the 3rd respondent which has been confirmed by the 6th Additional City Civil Judge, in AS 34/2005 dated 28th July, 2007, a suit filed u/s 34 of the Arbitration & Conciliation Act, 1996. Heard the learned counsel appearing for the parties. The appellant was the claimant before the Arbitral Tribunal. A claim was made against the respondent for a sum of Rs. 2,91,65,565/- with costs and interest contending that the loss has been caused on account of the blast in the plant of the claimant on 4-6-2004 only on account of the deficiency of service by the respondents 1 & 2.
An agreement was entered into between the appellant and respondents 1 & 2 under which the respondents 1 & 2 agreed to render engineering services required to set up a Plant to manufacture Cosmoceutical Speciality Chemicals. The respondent No. 1 undertook to provide various services including the design which shall be in conformity with the norms of USFDA/CGMP. The appellant agreed to pay Rs. 50,00,000/- as fee payable to respondents 1 & 2 and service tax at 5% thereon. The appellant had paid a sum of Rs. 38,58,479/- as on 7-4-2004. In terms of the agreement the respondents agreed to employ competent professionals. As agreed upon the respondent failed to provide the competent professionals in maintaining the vessel and while constructing the vessel and did not follow the norms of USFDA/CGMP. The blast occurred on 4-6-2004 when the vessel was charged for the first time mechanically. On account of the blast not only the vessel, but also the buildings of the appellant were damaged. Therefore based on the enquiry report dated 7-6-2004 the claim was made before the Arbitral tribunal.
The respondents denied the allegations made against them. According to them, the blast occurred due to the mishandling of the equipments by the claimants and the vessel were purchased from an inexperienced and incompetent persons, and claimed a counter claim of Rs. 7,48,762/- towards outstanding amounts payable to it and also another sum of Rs. 1,00,000/- claimed as damages.
Based on the statement of objections of the respondent the Arbitral Tribunal formulated the following Issues for its consideration:-
1) Whether the blast occurred on 4-6-2004 in the plant was the direct result of the respondent not adhering to the USFDA/CGMP requirement and if so whether the respondent is liable to pay the claimant Rs. 2,91,66,565/- towards the loss suffered by the claimant?
2) Is the respondent entitled to the counter claims 1 to 4?
Before the Tribunal 5 witnesses were examined on behalf of the claimants 1 to 5 and produced Exhibits C1 to 18. On behalf of the respondents 3 witnesses were examined as R.W. 1 to 3. They relied upon Exs. R-1 to 33. The tribunal after considering the entire evidence let in by the parties and the documents held point No. 1 in affirmative and point No. 2 partly in affirmative. The claim petition was dismissed. The counter claim was allowed in part by the award dated 13th December, 2005 directing the appellant to pay a sum of Rs. 4,82,823/- with interest at 12% per annum.
Aggrieved by the award of the Tribunal an appeal came to be filed u/s 34 of the Arbitration Act before the Civil Court. In the suit the court below formulated the following points for its consideration:-
1) Whether the plaintiff proves any of the grounds mentioned u/s 34 of the Arbitration & Conciliation Act, 1996 to set aside the award passed by the learned Arbitrator?
2) What order?
After hearing the learned Advocates and upon considering the various Judgments sought to be relied upon by both the parties held Point No. 1 in negative and dismissed the suit by the Judgment & decree dated 28th July, 2007. Aggrieved by the concurrent findings of the court below the present appeal is filed u/s 37 of the Arbitration & Conciliation Act.
Though several grounds have been urged in the appeal memo; at the time of arguments the following points are canvassed before us. According to the learned counsel appearing for the appellant, the Tribunal as well as the trial Court did not consider the evidence properly. Without considering the scope of Section 34 on an erroneous ground has dismissed the suit, and the same is contrary to Section 34 of the Arbitration & Conciliation Act. According to him, the main contention of the appellant before the Tribunal was that the respondent while agreeing to provide service did not adhere to USFDA/CGMP norms and if they had followed the said norms the blast could not have occurred at the time of trial production. According to him, after erection before handing over the vessel, the vessel was not properly cleaned and the vessel had contained outside particles and it was not properly fabricated as per the norms; and had contained the rough edge. He further contends that the counter claim allowed by the Tribunal which has been confirmed in the suit is also required to be set aside.
The learned counsel appearing for the respondent submits that the Arbitral Tribunal has considered the case of the appellant in detail. After considering the evidence of R.Ws. 1 and 2; a categorical finding has been given by the Tribunal based on the proper appreciation of the evidence to the effect that the vent was opened. After the vessel was handed over to the claimants and that the claimants in the presence of the site Engineers and experienced officials of the respondent the test was conducted and on account of improper handling of the vessel the blast has occurred for which the appellant cannot be found fault with the respondent. According to him., the award of the tribunal is based on proper appreciation of the evidence. Therefore he contends that the appellant cannot contend that the Tribunal did not consider the case properly and that Section 34 of the Arbitration Act and has not been properly followed by this Court. In the circumstances, he requests the Court to dismiss the appeal.
Having heard the learned counsel appearing for the parties it is not in dispute that the scope of appeal u/s 37 is very limited. For proper appreciation of Section 37 we have to follow the Judgment of the Supreme Court in the case of Delhi Development Authority Vs. R.S. Sharma and Co., New Delhi, . We have examined the present case in the back drop of the Judgment of the Hon''ble Supreme Court in the case of Delhi Development Authority. The main contention of the appellant before the learned Arbitral Tribunal was that there was failure on the part of the respondents in providing service and it was not properly supervised and due to improper fabrication and not following the norms the blast occurred. Therefore the liability has to be saddled on the respondent. To consider this point we have also perused the evidence let in by the parties and so also the findings of the Arbitral Tribunal.
At the first instance the question is whether the respondent was required to follow the norms of USFDA/CGMP and whether the said norm has been given up by the respondent, at their instance or at the instance of the appellant, at internal page 13 & 14 of the award the learned Arbitrator has given a clear cut finding that the appellant on its own did not insist the respondent to follow the norms of USFDA/CGMP. While discussing, the learned Tribunal has also stated that the work was entrusted to a contractor for a fabrication who was not of a well repute. The reason is also assigned for engaging such contractor by the appellant. For the reasons best known to the claimant if the claimant has engaged a person who had no knowledge in the field, and for any mistake committed by such a contractor while erecting the vessel the court cannot find fault with the respondent and that the appellant has to be blamed for himself. Again at page Nos. 26 to 30 the learned Arbitrator has discussed the evidence in full. The learned Arbitrator has also come to the conclusion that the outside particles in the vessel or in the pipelines were the reasons for causing of the blast. But he has also given a finding that when the vessel was handed over to the appellant the vent was closed and when the blast occurred the vent of the vessel was opened and that the pipelines were not properly passivated and cleaned. If vent is opened in the absence of respondent''s Engineer and if that there is no proper cleaning of the vessel and the pipeline and if the vessel is charged behind the back of the Engineers of the respondent and that the vessel has been charged when the vessel lines were yet to be ready for proper use; the claimant appellant cannot blame the respondent. Therefore we are of the view that the evidence has been properly appreciated by the Arbitral Court and the finding of the Arbitrator is based on the documents and oral evidence let in by the parties. When we hold that the finding of the Arbitrator is based on the proper appreciation of the evidence and all the contentions raised by the claimant has been answered the question of interference by the Civil court u/s 34 of the Arbitral Act does not arise at all. It is no doubt true that an aggrieved person can file a suit invoking Section 34 of the Arbitration and Conciliation Act. But the fact remains that the person who approaches the Court has to bring his or its case within the parameters of Section 34 of the Arbitration & Conciliation Act. Unfortunately none of the grounds available u/s 34 is attracted to the facts & circumstances of the present case. In the circumstances of the case if the arbitral suit is dismissed by the Court below, the ground to interfere u/s 37 is very limited and no case is made out by the appellant that calls for any interference. In the result, the appeal is dismissed.
The learned counsel appearing for the appellant has filed I.A. 1/2011 which does not survive for consideration. Accordingly it is dismissed.