M/S Bhasin Construction Company Pvt. Ltd vs Union Of India

Gautam Kumar Choudhary, J

Heard, learned counsel for the parties.

This arbitration appeal is directed against the order dated 30.04.2015 passed by Sub-Judge VIII, Ranchi in Misc. Case No. 81/1985 whereby and whereunder the award dated 26.11.1984 was made Rule of the Court and the appellant was directed to make the payment in terms of the award within 90 days of the order.

The appellant was a contractor of Union of India and was working with Union of India and a dispute arose between the parties in certain civil works completed by the appellant which was referred to sole Arbitrator namely Brigadier V. Wadhawan. The sole Arbitrator passed an award of Rs. 5,18,390/-in favor of the Chief Engineer, North Zone, Lucknow.

The said award was affirmed in Misc. Case No. 81/85 under Sections 30 and 33 of Arbitration Act, 1940 which is under challenge before this Court.

It is argued that the award has not been made in terms of the reference to the arbitrator. The terms of reference have been enclosed as Annexure 1 and 1/A of the Arbitration Title Suit No. 01 of 1985 in which altogether 6 references were made, but learned Arbitrator confined himself only to clause 4 and other compensation that were referred and there is no finding in that regard. It was incumbent on the part of the Arbitrator to have recorded its finding on the other points of reference and no reason has been assigned as to why the other references has not been answered.

Claims has been answered by the learned Arbitrator as under: -

Claim No. 1- Payment for materials taken over by the Department on termination of contract: Rs. 3,28,221/-.

The claim is partially established. Awarded Rs. 2,01,300/-(Rupees Two Lakhs One Thousand Three Hundred Only.)

Claim No. 2- Payment for Water tank and Temporary Structures put up by us and taken over by the Department: Rs. 53,910/-

The claim is partially established. Awarded Rs. 20,280/- (Rupees Twenty Thousand Two Hundred Eighty only).

Claim No.3- Reimbursement of extra expenditure incurred in consequence of statutory increase in Minimum Wage of labour: Rs. 1,13,848/-The claim is partially established. Awarded Rs. 41,500/- ( Rupees Forty One Thousand and Five Hundred Only).

Claim No.4- Reimbursement of extra expenditure incurred due to statutory increase in price of Diesel: Rs. 5,352/-

The claim is not established. Awarded Nil.

Claim No. 5- Reimbursement of extra expenditure incurred due to purchase and use of diesel operated equipment because of the extreme shortage of electricity: Rs. 1,06,296/-

The claim is not established. Awarded Nil.

Claim No. 6- Reimbursement of extra expenditure incurred on over-heads due to prolongation of the period of work: Rs. 1,76,000/-

The claim is partially established, Awarded Rs. 37,000/- (Rupees Thirty-Seven Thousand Only).

Claim No. 7- Payment of Interest prior to Reference, Interest Pendente-lite and Interest upto the date of payment of the award.

The claim is not established, Awarded Nil.

It is submitted by learned counsel for the respondent that in the judgment passed by the learned Court below in which it has been noted that the Arbitrator had considered all the points of reference and has passed the order with respect to it.

It is argued by the learned counsel on behalf of the respondent that the points being raised in appeal were not agitated before the learned Court below and no fresh ground can be raised in appeal before this Court in view of the ratio laid down by Hon’ble the Supreme Court in the judgment reported in 2022 (3) SCC 739, Atlanta Ltd. Through its Managing Director Vs. Union of India represented by Chief Engineer Military Engineering Service.

At the outset it may be noted that scope of interference in the award under Section 30 of the Arbitration Act,1940 is a limited one which is quoted below and it specifically provides only three grounds for challenge:

Grounds for setting aside award. — An award shall not be set aside except on one or more of the following grounds, namely—

(A) that an arbitrator or umpire has misconducted himself or the proceedings;

(B) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;

(C) that an award has been improperly procured or is otherwise invalid.

There is a long line of judicial precedents that absence of reason cannot be construed as misconduct on the part of the Arbitrator to furnish it as an substantial ground to set aside the award. Arbitrator’s adjudication is generally considered binding between the parties, as he is a Tribunal selected by the parties and the power of Court to set aside the award is only limited to the grounds under Section 30 as set out above. It can be set aside on the ground of error of law apparent on the face of award which shall amount to misconduct. Misconduct under Section 30(a) implies a legal misconduct, which will be if inconsistent conclusion is drawn by the Arbitrator ignoring material documents since Arbitrator is a Judge by choice of the parties and more often than with a person with little or no legal background. The award can be couched in a manner, not necessarily in tune with legal jargon, but that per se cannot be a ground for interference. This is so because Courts cannot step into shoes of Arbitrator and re-appreciate evidence with a close scrutiny for finding out the reason behind conclusions. Under the Arbitration Act, 1940 there was no requirement of giving reason in the award. [See Bungo Steel Furniture (P) Ltd. v. Union of India, AIR 1967 SC 378; Ispat Engg. & Foundry Works v. SAIL, (2001) 6 SCC 347; Seth Mohanlal Hiralal v. State of M.P., (2003) 12 SCC 144; S.S. Jatley v. College of Vocational Studies, 1994 Supp (2) SCC 402 at page 403; State of Rajasthan v. Puri Construction Co. Ltd., (1994) 6 SCC 485; Food Corpn. of India v. Jagdish Chandra Saha, 1995 Supp (4) SCC 521; Gora Lal v. Union of India, (2003) 12 SCC 459;]

In the present case, sole ground for challenge to the award is absence of reason in the arbitral award. Arbitrator being a Brigadier in rank, cannot be credited with legal knowledge where elaborate reason could have been given to support the conclusion reached in the award. There is no other material to impute misconduct on the part of Arbitrator. Under the circumstance, this Court does not find any infirmity in the award and the impugned order calling for interference at the appellate stage in the award, which has already been made Rule of Court.

Arbitration Appeal stands dismissed.

Pending I.A., if any, stands disposed of.