State of Rajasthan vs Om Construction Co. and Others

Pratap Krishna Lohra, J.—All these connected miscellaneous appeals under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, ''Act'') by the appellant State and its authorities against the very same respondent M/s. Om Construction company, involve identical points in controversy as well as reliefs, except awarding sum under few different heads by the sole arbitrator. The challenge in these appeals is to the impugned orders passed by District Judge, Jaisalmer, on the applications moved by appellant State under Section 34 of the Act, and against the arbitral awards passed by the sole arbitrator, as such, these appeal have been heard together and are being decided by this common judgment.

For convenience, the facts of S.B. Civil Misc. Appeal No. 728/2010 are taken for deciding these matters, as the issues raised therein are also involved in all other connected appeals.

FACTS OF S.B. CIVIL MISC. APPEAL NO.728/2010:

Appalled by the order dated 23rd March, 2010, passed in Civil Misc. Application No. 06/2008 by the learned District Judge, Jaisalmer (for short, ''learned Court below''). By the order impugned, learned Court below has rejected the application of the appellants under Section 34 of the Act for setting aside arbitral award dated 26th of October, 2007 in toto.

Succinctly stated, the facts of the case are that, appellants invited tender for manufacture and supply of 20 lacs PCC blocks in size 30 X 15 X 4 cm to Workshop Unit No. 5 and 6 of Saheed Birbal Branch at RD 115. The respondent-firm submitted its tender for the aforesaid work, which was accepted vide order dated 21.10.1991. Thereafter, a work order dated 13.01.1992 was issued in favour of the respondent-firm. In terms of the work order, the work was to be completed within one year to be reckoned w.e.f. 12th December, 1991 with deadline as 11th December, 1992. An agreement was also executed between the rival parties bearing No. 55, stipulating terms and conditions of the contract. It appears that some dispute cropped up between the contracting parties essentially concerning transportation of cement and that caused delay in commencement of project. Besides that, there was some problem in storage of water at site, which also created acrimony between the parties, inasmuch as the appellants insisted that in terms of the agreement construction of diggies for storage of water ought to have been undertaken by the respondent. The non-construction of diggies for storage of water also delayed the project. In that background, for resolving the dispute, the contracting parties while invoking arbitration clause under the agreement decided to refer the matter to arbitrator. By mutual consent, vide order dated 30th May, 2002, Mr. J.M. Kalla, Superintending Engineer, Indira Gandhi Nahar Pariyojana (IGNP), was appointed as sole arbitrator for adjudicating the dispute.

The respondent submitted its claim before the arbitrator for ventilating its grievance. In the claim, respondent has highlighted numerous reasons for the delay caused in completion of the project and attributed total apathy on the part of the appellants to fulfill the terms and conditions of the agreement. Besides raising grievance against the appellants for non-supply of authenticated copy of agreement, the respondent has also alleged that the appellants have not made endeavour to supply water and cement during subsistence of contract in gross violation of the terms and conditions of contract, and therefore, appellants are responsible for breach of contract. On the strength of these facts, the respondent-firm quantified the total damages amounting to Rs. 9,00,000/-. That apart, the respondent-firm also claimed a sum of Rs. 31,200/- for extra lead of sand and Rs. 45,000/- for non-user of the material. Other claims were also laid for non-payment of final bill and idling of labour, machinery and staff. A separate claim is also laid for recovery of the earnest money and interest on the claim amount @ 18% per annum which was quantified as Rs. 13,67,600/-. Interest pendente lite as well as future interest was also claimed by the respondent-firm. For substantiating its claim, the respondent-firm has pleaded materials facts with clarity and precision.

Refuting the claim of the respondent-firm, a detailed reply was submitted by the appellants. In the return, allegation of ineffective supply of water is specifically denied with the positive assertion that adequate water was supplied to the contractor by installing pipelines. Attributing a total callousness on the part of the respondent-firm in commencing the work in time, appellants have pleaded in the reply that despite repeated notices it has not made endeavour to start work for facilitating its completion within the stipulated duration. With all these averments, the appellants craved for rejection of the claim of the respondent-firm.

While submitting its reply to the claim of the respondent-firm, appellants have also laid a counter-claim quantifying the amount as Rs. 3,30,000/-. The edifice of counter-claim is articulated by attributing breach of contract on the part of respondent-firm. As per the appellants, time was essence of the contract and due to non-completion of contract within the stipulated duration, the appellants were compelled to carry requisite tiles from a distant place and for that they incurred additional amount of Rs. 1,75,000/-, which is recoverable from the respondent-firm.

After submission of pleadings of the rival parties, the sole arbitrator settled seventeen issues for determination.

The rival parties submitted their documentary evidence and also led their oral evidence for strengthening their case. The sole arbitrator, while considering the evidence and other materials available on record, thrashed out the matter in its entirety and passed the arbitral award on 22.10.2007, whereby claim of the respondent-firm is partly allowed and counter-claim of the appellants is rejected in toto. Operative portion of the arbitral award reads as under:

Vernacular Matter ommited here

Feeling dismayed by the arbitral award, appellants made endeavour to invoke the jurisdiction of learned Court below under Section 34 of the Act for setting aside arbitral award. In the application under Section 34 of the Act, appellants have urged that arbitral award is perverse and dehors the law. It is also pleaded that the sole arbitrator has transgressed its jurisdiction in passing the award. To assail the arbitral award, appellants have also averred in the application that the sole arbitrator has not appreciated the evidence on record in right perspective and on the face of it the arbitral award is an outcome of mechanical exercise of power. A prayer is also made in the application for setting aside part of the arbitral award whereby the appellants'' counter-claim is rejected. A special plea is also incorporated in the application that the arbitral award is vitiated as it is violative of principles of natural justice and awarding of interest is contrary to the terms of the agreement. Arbitral award is also assailed on the ground that some of the claims of the respondent-firm were barred by limitation, but the sole arbitrator has allowed certain claims, which were barred by limitation.

The application aforesaid is contested by the respondent-firm by denying all the allegations. In the return, the respondent-firm has stoutly defended the arbitral award and submitted that none of the grounds set out in the application are sufficient to vitiate the arbitral award. It is also urged in the reply that for setting aside arbitral award, jurisdiction under Section 34 of the Act can be exercised within the four corners of any of the grounds set out under sub-section (2) of Section 34 of the Act. Respondent also pleaded in the reply that an aggrieved party cannot crave for setting aside arbitral award on certain flimsy pretexts or unauthenticated grounds. It is also averred in the return that arbitral award is neither dehors the law, nor against the public policy and as such it requires no interference in the limited scope of judicial review under Section 34 of the Act.

The learned Court below, after considering the rival submissions, examined the arbitral award threadbare and by the impugned order declined to interfere with the same. While declining to interfere with the arbitral award, the learned Court below has also taken note of the legal precedents and concluded that none of the grounds are available to the appellants for setting aside arbitral award within the meaning of sub-section (2) of Section 34 of the Act. It is also opined by the learned Court below that there is no semblance of proof that arbitral award is contrary to the settled principles of law, or against the public policy. In the impugned order, the learned Court below has also observed that application under Section 34 of the Act is designed to prolong the matter with a view to harass the respondent-firm.

Mr. K.L. Thakur, learned Additional Advocate General, appearing for the appellants submits that findings of the learned arbitrator are not based on sound appreciation of evidence and materials available on record and that aspect has been completely eschewed by the learned Court below in the impugned order. He, therefore, submits that the arbitral award as well as impugned order is vitiated in law. The learned Additional Advocate General would contend that arbitral award has been passed in derogation to the terms and conditions of the agreement, and therefore, it is a clear case of transgressing jurisdiction by the sole arbitrator which ought to have been examined by the learned Court below under Section 34 of the Act. Learned counsel for the appellants further submits that the arbitral award is based on complete misreading of Clause 45 of the agreement so also Clause 3 of the agreement, a very vital, issue, which has not been addressed by the learned Court below in the impugned order, and therefore, the arbitral award as well as impugned order are per se vulnerable. Learned counsel for the appellants has also questioned the arbitral award to the extent it has awarded interest to the respondent-firm by urging that interest has been awarded contrary to the terms of agreement. Elaborating his submission, in this behalf, learned counsel submits that the learned Court below has also not considered this issue in right perspective, and therefore, both arbitral award as well as impugned order cannot be sustained. Learned Additional Advocate General has urged that impugned order is passed by the learned Court below mechanically without application of mind and even the learned Court below has not examined the counter-claim of the appellants appropriately, inasmuch as its rejection by the sole arbitrator was highly improper. Learned counsel lastly contends that the sole arbitrator has passed the arbitral award in violation of principles of natural justice and this aspect has not been considered by the learned Court below. In support of his contentions, learned Additional Advocate General has placed reliance on following judgments:-

� Sudarsan Trading Co. Vs. Government of Kerala and Another, AIR 1989 SC 890 : (1989) 2 ARBLR 6 : (1989) 1 CompLJ 289 : (1989) 1 JT 339 : (1989) 1 SCALE 395 : (1989) 2 SCC 38 : (1989) 1 SCR 665 : (1989) 2 UJ 26

� U.P. Cooperative Federation Ltd. Vs. Three Circles, (2009) 12 JT 123 : (2009) 12 SCALE 443 : (2009) 10 SCC 374 : (2009) 15 SCR 310 : (2009) 9 UJ 4416 .

� K.V. George Vs. Secretary to Government, Water and Power Department, Trivandrum and Another, AIR 1990 SC 53 : (1990) 1 ARBLR 55 : (1989) 4 JT 166 : (1989) 2 SCALE 822 : (1989) 4 SCC 595 : (1989) 1 SCR 398 Supp .

� Indian Oil Corporation Ltd. Vs. Amritsar Gas Service and Others, (1990) 4 JT 601 : (1990) 2 SCALE 1056 : (1991) 1 SCC 533 : (1990) 3 SCR 196 Supp : (1991) 1 UJ 96 ."

In M/s. Sudarsan Trading Company (supra), Hon''ble Apex Court, while examining the scope and ambit of Section 30 of the Arbitration Act, 1940, has considered two grounds set out for interfering with the arbitral award, namely, (i) an error apparent on the face of record, and (ii) arbitrator exceeded its jurisdiction. While taking into account these two grounds, the Court observed that in the later case, the Court can look into the arbitration agreement but in the former it cannot unless the agreement was incorporated or recited in the award. The Court held as under:

"An award may be remitted or set aside on the ground that the arbitrator in making it, had exceeded his jurisdiction and evidence of matters not appearing on the face of it, will be admitted in order to establish whether the jurisdiction had been exceeded or not, because the nature of the dispute is something which has to be determined outside the award - whatever might be said about it in the award or by the arbitrator."

While dilating on the scope of judicial review under Section 30 of the Act, Hon''ble Apex Court has also used a word of ''caution'' and held:

"...It has to be reiterated that an arbitrator acting beyond his jurisdiction - is a different ground from the error apparent on the face of the award. In Halsbury''s Laws of England II, 4th edn., Vol. 2, para 622 one of the misconducts enumerated, is the decision by the arbitrator on a matter which is not included in the agreement or reference. But in such a case one has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction. See the observations in Anisminic Ltd. v. Foreign Compensation Commission and Regina v. Noseda, Field, Knight and Fitzpatric. But, in the instant case the court had examined the different claims not to find out whether these claims were within the disputes referable to the arbitrator, but to find out whether in arriving at the decision, the arbitrator had acted correctly or incorrectly. This, in our opinion, the court had no jurisdiction to do, namely, substitution of its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contractor to the bargain between the parties. Whether a particular amount was liable to be paid o damages liable to be sustained, was a decision within the competency of the arbitrator in this case. By purporting to construe the contract the court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction..."

In U.P. Cooperative Federation Ltd. (supra) while construing Section 29 of the Arbitration Act, 1940 in conjunction with Section 3 of the Interest Act, 1978, Hon''ble Apex Court justified awarding of interest by the arbitrator for pre-reference period and held:

"27. So far as the payment of interest is concerned, the Division Bench of the High Court after analyzing the decisions of this Court, namely, Engineer (Irrigation) v. Abhaduta Jena and Irrigation Deptt,. Government of Orissa v. G.C. Roy came to the conclusion of law which was that the arbitrator has power to award pendente lite interest and where the contract was silent as to the awarding of interest, the arbitrator has the power to award interest for the pre-reference period if there is a substantive law which empowers him to do so or if there is a usage of trade for payment which has the force of law. In our view, the High Court was perfectly justified in holding that the arbitrator has the power to award interest for the pre-reference period. It needs to be repeated at this juncture that the arbitration in question was governed not by the present Act of 1996 but by the provisions of the Arbitration Act, 1940. However, as this power emanates from Section 3 of the Interest Act, 1978, the High Court noted that the rate of interest cannot be more than "the current rate of interest" as stipulated by the said Section. Accordingly, the High Court had reduced the rate of interest for pre-reference period from 18% to 15%.

It was, however, argued on behalf of the appellant that the High Court was not justified in awarding interest for pre-reference period in view of Section 3 of the Interest Act, 1978 which was pursuant to a special clause in the Contract. As in the present case there was no such clause in the agreement and hence it was not within the power of the arbitrator to make an award with respect to interest. In our view, this argument lacks substance.

The position of law, as found by the High Court in its impugned judgment on consideration of various other judgments of this Court, would clearly show that in those judgments the High Court relied on also did not stipulate any express agreement with respect to interest as a precondition to the authority of the Arbitrator to award interest for the pre-reference period. The matter would have a different issue altogether if there had been a specific provision prohibiting grant of interest which was, of course, not the case of the appellant.

In State of Rajasthan and Anr v. Ferro Concrete Construction (P) Ltd. the same work was advanced in which this Court observed: (SCC p.22, para 60)

"60... But this Court has held that in the absence of an express bar, the arbitrator has the jurisdiction and authority to award interest for all the three periods - pre reference, pendente lite and future (vide decisions of the Constitution Bench in Irrigation Deptt., Govt. of Orissa v. G.C. Roy, Dhenkanal Minor Irrigation Division v. N.C. Budharaj and the subsequent decision in Bhagawati Oxygen Ltd. v. Hindustan Copper Ltd. In [this] case as there was no express bar in the contract in regard to interest, the arbitrator could award interest."

In view of the above decision in law now settled by this Court, we are unable to hold that the arbitrator was not entitled to award interest on the pre-reference period because there was no clause in the agreement prohibiting such awarding of interest. However, the High Court had reduced the rate of interest to the ''current rate of interest'' and therefore, it is not open for us to interfere with such rate of interest at this stage in this appeal. Therefore, there is no substance in this argument, accordingly it is rejected."

In Indian Oil Corporation Ltd. (supra), interpreting Sections 30 and 33 of the Arbitration Act, 1940, Hon''ble Apex court, while reiterating the principles that directions in the award based on finding of fact are not open to the Court''s interference and concluded that an error apparent on the face of award can be examined by the Courts. The Court held:

"12. The arbitrator recorded finding on Issue No. 1 that termination of distributorship by the appellant-Corporation was not validly made under Clause 27. Thereafter, he proceeded to record the finding on Issue No. 2 relating to grant of relief and held that the plaintiff-respondent 1 was entitled to compensation flowing from the breach of contract till the breach was remedied by restoration of distributorship. Restoration of distributorship was granted in view of the peculiar facts of the case on the basis of which it was treated to be an exceptional case for the reasons given. The reasons given state that the Distributorship Agreement was for an indefinite period till terminated in accordance with the terms of the agreement and, therefore, the plaintiff-respondent 1 was entitled to continuance of the distributorship till it was terminated in accordance with the agreed terms. The award further says as under:

"This award will, however, not fetter the right of the defendant Corporation to terminate the distributorship of the plaintiff in accordance with the terms of the agreement dated April 1, 1976, if and when an occasion arises.

This finding read along with the reasons given in the award clearly accepts that the distributorship could be terminated in accordance with the terms of the agreement dated April 1, 976, which contains the aforesaid clauses 27 and 28. Having said so in the award itself, it is obvious that the arbitrator held the distributorship to be revokable in accordance with clauses 27 and 28 of the agreement. It is in this sense that the award describes the Distributorship Agreement as one for an indefinite period, that is, till terminated in accordance with clauses 27 and 28. The finding in the award being that the Distributorship Agreement was revokable and the same being admittedly for rendering personal service, the relevant provisions of the Specific Relief Act were automatically attracted. Sub-section (1) of Section 14 of the Specific Relief Act specifies the contracts which cannot be specifically enforced, one of which is ''a contract which is in its nature determinable''. In the present case, it is not necessary to refer to the other clauses of sub-section (1) of Section 14, which also may be attracted in the present case since clause (c) clearly applies on the finding read with reason given in the award itself that the contract by its nature is determinable. This being so granting the relief of restoration of the distributorship even on the finding that the breach was committed by the appellant-Corporation is contrary to the mandate in Section 14(1) of the Specific Relief Act and there is an error of law apparent on the face of the award which is stated to be made according to ''the law governing such cases''. The grant of this relief in the award cannot, therefore, be sustained.

Another relief granted in the award is the price of 224 cylinders and 384 regulators taken away by the appellant-Corporation from the plaintiff-respondent 1. These articles did not belong to the plaintiff-respondent 1 and were the property of the appellant-Corporation and, therefore, the direction to pay its price to the plaintiff-respondent 1 also discloses an error of law apparent on the face of the award. The appellant-Corporation has also been directed in the award to return the amounts of two bank drafts of Rs. 15,580.83 each dated March 8, 1983 and March 11, 1983 on the ground that no supplies were made to the plaintiff-respondent 1 against these amounts. This direction is based on a finding of fact which cannot be gone into and, therefore, the same cannot be interfered with."

In K.V. Geroge (supra), Hon''ble Apex Court, while examining mis-conduct of the arbitrator in light of Sections 30, 33 and 41 of the Arbitration Act, 1940, found that passing of arbitral award without considering counter-claims, is a clear case of mis-conduct by the arbitrator and such award is illegal and not sustainable. The Court observed:

"12. The first question that falls for consideration in this case is whether the finding of the High Court setting aside the order of review made in I.A. No. 3780 of 1981 and setting aside the order made in O.P. (Arb.) No. 81 of 1981 dated August 18, 1981 whereby the case was remanded to the arbitrator is sustainable or not. Admittedly, the appellant filed a claim petition being Arbitration Case No. 132 of 1980 making certain claims before the arbitrator. The respondents filed the counter-claims. The arbitrator without considering the counter-claims kept the counter-claims for subsequent consideration and made an award. The Trial Court set aside the award and remitted the same to the arbitrator for making a fresh award considering the claims and counter-claims filed by the parties. On an application for review, the trial court set aside the order and passed a decree in terms of the award. It is not disputed that the arbitrator did not at all consider the counter-claims and kept the same for consideration subsequently while making award in respect of the claims filed by the appellant. Undoubtedly, this award made by the arbitrator is not sustainable in law and the arbitrator has misconduct himself and in the proceedings by making such an award. It is the duty of the arbitrator while considering the claims of the appellant to consider also the counter-claims made on behalf of the respondents and to make the award after considering both the claims and counter-claims. This has not been done and the arbitrator did not at all consider the counter-claims of the respondents in making the award. As such the first award dated January 22, 1981 made by the arbitrator in Arbitration Case No. 132 of 1980 is wholly illegal and unwarranted and the High Court was right in holding that the arbitrator misconduct himself and the proceedings in making such an award and in setting aside the same and directing the arbitrator to dispose of the reference in accordance with law considering the claim of the contractor and the counter-claim of the respondents. The order allowing the application for review by the trial court is also bad inasmuch as there was no mistake or error apparent on the face of the order dated August 18, 1981 made in O.P.(Arb.) No. 81 of 1981 nor any sufficient reason has been made out for review of the said order. The order dated August 18, 1981 is legal and valid order and the order dated March 18, 1982 allowing the application for review being I.A. No. 3780 of 1981 and setting aside the order in O.P. (Arb.) 81 of 1981 dated August 18, 1981 is, therefore, bad and unsustainable."

E. Converso, learned counsel for the respondent, Mr. B.D. Purohit, submits that the sole arbitrator has examined the matter threadbare and thus the award cannot be questioned by the contracting parties at their whims and fancy and as such the learned Court below while examining the scope and ambit of Section 34 of the Act has rightly rejected the application of the appellants. Learned counsel further submits that the sole arbitrator, while passing the arbitral award, has neither exceeded its jurisdiction, nor any error is apparent on the face of award, and as such the learned Court below has rightly declined to exercise jurisdiction under Section 34 of the Act. Mr. Purohit, learned counsel for the respondent, would contend that the sole arbitrator has not committed any mis-conduct and there is no semblance of proof that arbitral award is an outcome of fraud or corrupt practice, and as such by the impugned order the learned Court below has rightly declined to interfere with the arbitral award. Learned counsel further submits that the grounds set out in the application under Section 34 of the Act by the appellants are not satisfying the requirements of sub-sections (2) and (3) of Section 34 of the Act and as such the learned Court below has not committed any error much less jurisdictional error in rejecting the application of the appellants. Lastly, learned counsel has urged that interpretation of contract is a matter within the discretion of arbitrator and Courts cannot trench into this sphere to substitute its own decision. In totality, learned counsel for the respondent submits that the learned Court below has rightly exercised its discretion in rejecting the application under Section 34 of the Act, which warrants no interference in limited scope of judicial review in this appeal. In support of his contentions, learned counsel for the respondent has placed reliance on following legal precedents:

� M/s Ganges Waterproof Works (P) Ltd. Vs. Union of India, AIR 1999 SC 1102 : (1999) 1 ARBLR 363 : (1999) 1 JT 191 : (1999) 1 SCALE 193 : (1999) 4 SCC 33 : (1999) 1 UJ 392 : (1999) AIRSCW 752 : (1999) 1 Supreme 222 .

� T.P. George Vs. State of Kerala and Another, AIR 2001 SC 816 : (2001) 2 JT 438 : (2001) 1 SCALE 667 : (2001) AIRSCW 616 : (2001) AIRSCW 4022 : (2001) 7 Supreme 518 : (2001) 1 Supreme 556 .

� State of Jammu & Kashmir and Another Vs. Dev Dutt Pandit, AIR 1999 SC 3196 : (1999) 6 JT 283 : (1999) 5 SCALE 241 : (1999) 7 SCC 339 : (1999) 2 SCR 1 Supp : (1999) AIRSCW 3160 : (1999) 7 Supreme 524 .

� Secretary, Irrigation Department, Government of Orissa and others Vs. G.C. Roy, AIR 1992 SC 732 : (1992) 1 ARBLR 145 : (1991) 6 JT 349 : (1991) 2 SCALE 1369 : (1992) 1 SCC 508 : (1991) 3 SCR 417 Supp : (1991) 3 SCR 417 : (1992) 1 UJ 276 .

� S. Harcharan Singh Vs. Union of India, AIR 1991 SC 945 : (1990) 2 ARBLR 243 : (1990) 3 JT 692 : (1990) 2 SCALE 413 : (1990) 4 SCC 647 : (1990) 1 SCR 76 Supp : (1990) 2 UJ 673 .

� B.V. Radha Krishna Vs. Sponge Iron India Ltd., AIR 1997 SC 1324 : (1997) 3 JT 327 : (1997) 2 SCALE 469 : (1997) 4 SCC 693 : (1997) 2 SCR 707 : (1997) 1 UJ 661 : (1997) AIRSCW 1422 : (1997) 3 Supreme 1 .

� State of Rajasthan v. M/s. Ferro Concrete Construction (India) Pvt. Ltd. and Anr. [2007 (2) CDR 1545 (Raj.) ].

� BOC India Ltd. Vs. Bhagwati Oxygen Ltd., (2007) 1 ARBLR 476 : (2007) 8 JT 258 : (2007) 4 SCALE 325 : (2007) 9 SCC 503 : (2007) 3 SCR 915 ."

In M/s. Ganges Waterproof Works (P) Ltd. (supra), Hon''ble Apex Court, while construing the scope and ambit of Section 30 of the Arbitration Act, 1940 for setting aside arbitral award, on the ground of non-application of mind and violation of principles of natural justice, rejected such pleas in want of substantial material and no-timely protest before the sole arbitrator. The Court held:

"5. As to the second contention, we have perused the contents of the Award dated 23rd August, 1982. It is a non-speaking award. Just before recording the finding, the learned Arbitrator has stated "And Whereas I heard and examined and considered the statements of the parties and their evidence". It is the use of the word ''evidence'' wherefrom the learned counsel for the petitioner has sought to build up a plea that the Arbitrator had in his mind the oral testimony of the witnesses while there is none adduced by the parties and hence none available on the record of the Arbitrator and this shows the non-application of mind on the part of the Arbitrator to the record of the proceedings. We find the plea so raised entirely misconceived. The learned Single Judge, as also the Division Bench, have rightly explained that the word ''evidence'' as used by the Arbitrator does not necessarily mean oral evidence adduced. There were documents available on record of the Arbitrator which also amount to evidence and that is what the Arbitrator had in his mind. A inference as to non-application of mind or misstatement on the part of the Arbitrator while pronouncing the award cannot be drawn by assigning the term evidence such a meaning as is sought to be assigned by the learned counsel for the petitioner. The second contention is also rejected.

The third and the last plea urged is equally devoid of any merit. The burden of substantiating the averment urged as an objection tantamounting to misconduct on the part of the Arbitrator or complaining of violation of principles of natural justice was on the petitioner. No evidence was adduced to substantiate the plea. The best person to depose as to what had actually transpired at the hearing and whether the same was a real hearing or an eye-wash merely was the counsel who actually made submissions on behalf of the petitioner before the Arbitrator. The least that was expected of the petitioner was to have filed an affidavit of the counsel before the Court. That was not done. No timely protest was raised before the Arbitrator. The hearing was concluded on 11-8-1982 and the award was made on 23-8-1982. During these 12 days also, the petitioner company never urged before the Arbitrator that submissions on its behalf were not permitted to be made by the Arbitrator. The Learned Single Judge, as also the Division Bench, have arrived at a finding that the plea was an afterthought and certainly not substantiated. We also do not find any reason to take a view different from the one taken by the High Court."

In T.P. George (supra), Hon''ble Apex Court, while interpreting Section 31(7) of the Act, has concluded that arbitrator is empowered to award interest at all the four stages and discretion exercised by the arbitrator cannot be questioned. Court held as under:

"9. The next question is whether the High Court was right in setting aside the award of the interest from the date of the Award. This Court has held in the case of M/s. Jagdish Rai and Brothers Vs. Union of India, AIR 1999 SC 1258 : (1999) 1 ARBLR 696 : (1999) 2 CTC 240 : (1999) 2 JT 268 : (1999) 2 SCALE 141 : (1999) 3 SCC 257 : (1999) 1 UJ 655 : (1999) AIRSCW 940 : (1999) 3 Supreme 22 that the award of interest ought to be granted in all cases when there is a decree of money unless there are strong reasons to decline the same. In the case of M/s. Jagdish Rai and Brothers Vs. Union of India, AIR 1999 SC 1258 : (1999) 1 ARBLR 696 : (1999) 2 CTC 240 : (1999) 2 JT 268 : (1999) 2 SCALE 141 : (1999) 3 SCC 257 : (1999) 1 UJ 655 : (1999) AIRSCW 940 : (1999) 3 Supreme 22 , this Court has held that there are four stages of grant of interest, viz. (1) from the stage of accrual of cause of action till filling of the arbitration proceedings, (2) during pendency of the proceedings before arbitrator, (3) future interest arising between date of award and date of the decree and (4) interest arising from date of decree till realisation of award. The power of Court to grant interest from date of decree is not in doubt. In the case of Hindustan Construction Co. Ltd. Vs. State of Jammu and Kashmir, AIR 1992 SC 2192 : (1992) 2 ARBLR 412 : (1992) 2 SCALE 427 : (1992) 4 SCC 217 : (1992) 1 SCR 297 Supp : (1992) 2 UJ 750 this Court has held that the Arbitrator is competent to award interest from the date of the Award. This Court has held in the case of Secretary, Irrigation Department, Government of Orissa and others Vs. G.C. Roy, AIR 1992 SC 732 : (1992) 1 ARBLR 145 : (1991) 6 JT 349 : (1991) 2 SCALE 1369 : (1992) 1 SCC 508 : (1991) 3 SCR 417 Supp : (1991) 3 SCR 417 : (1992) 1 UJ 276 , that the arbitrator has power to grant interest pendente lite. Recently in the case of Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa, Vs. N.C. Budharaj (Dead) by Lrs. etc. etc., AIR 2001 SC 626 : (2001) 91 CLT 754 : (2001) 1 JT 486 : (2001) 1 SCALE 109 : (1999) 9 SCC 514 : (2001) 1 SCR 264 , this Court has held that arbitrator can award interest for the pre-reference period. Thus as per law laid down by this Court interest can be awarded at all four stages. The reasoning given by the High Court that interest cannot be awarded by the arbitrator is thus fallacious and cannot be sustained. In our view the direction to pay interest from date of Award cannot be faulted. The impugned judgment to the extent that it disallows the interest from the date of the Award is set aside."

In State of J and K (supra), while interpreting the term "idle employees", Hon''ble Apex Court gave it wider connotation so as to include regular employees of the contractor as well as labourers. Court held as under:

"16. Under clause 17 of the contract it is the contractor, who is responsible for any damage or loss to the work or part thereof caused due to any reason whatsoever and he at his own cost is required to repair and to make good of loss or damage. Contractor, therefore, could not claim any loss done to him on account of early onset of monsoon or otherwise. Similarly under the terms of the contract he cannot claim any amounts towards idle labour. As a matter of fact under clause 69 these claims are not entertainable at all. Mr. Thakur for the contractor said that "idle employees" as mentioned in clause 69 of the contract is not the same thing as "idle labour". According to him, the term "idle employees" would mean regular employees on the roll of the contract or like Engineers etc. We do not think such a restricted construction can be put on the term "idle employees" as not include idle labour as well. Read as a whole skilled and unskilled labour are all employees of the contractor under the contract."

A Constitution Bench of Hon''ble Apex Court in Secretary, Irrigation Department, Government of Orissa and Ors. (supra), while construing Sections 47 and 41 of the Arbitration Act, 1940, has gone to the extent of saying that even if agreement is silent for grant of interest, it can be presumed that interest was an implied term of the agreement between the parties so as to clothe the arbitrator to award pendente lite interest. Court held as under:

"45. Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (alongwith the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes-or refer the dispute as to interest as such-to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view."

In S. Harcharan Singh (supra), Hon''ble Apex Court held that even if arbitral award is not reasoned, the same cannot be questioned on the ground of error on the face of award, if agreement or deed of submission not requiring arbitrator to give reasons.

In B.V. Radha Krishna (supra), while examining scope of judicial review under Section 30 of the Arbitration Act, 1940, Hon''ble Apex Court, recorded a categorical finding that High Court cannot substitute its own view in place of arbitrator as the Court cannot examine the matter as a regular appellate Court. Court held as under:

"12. This Court again observed in paras 26-28 (of SCC) : (Paras 25-27 of AIR) as follows :

"The Arbitrator is the final arbiter for the disputes between the parties and 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. In Sudarsan Trading Co. Vs. Government of Kerala and Another, AIR 1989 SC 890 : (1989) 2 ARBLR 6 : (1989) 1 CompLJ 289 : (1989) 1 JT 339 : (1989) 1 SCALE 395 : (1989) 2 SCC 38 : (1989) 1 SCR 665 : (1989) 2 UJ 26 , it has been held by this Court that there is a distinction between disputes as to the jurisdiction of the Arbitrator and the disputes as to in what way that jurisdiction should be exercised. There may be a conflict as to the power of the Arbitrator to grant a particular remedy. One has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction. Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the Arbitrator had acted contrary to the bargain between the parties. (emphasis supplied) Whether a particular amount was liable to be paid is a decision within the competency 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. If on a view taken of a contract, the decision of the Arbitrator on certain amounts awarded is a possible view though perhaps not the only correct view, the award cannot be examined by the Court. Where the reasons have been given by the Arbitrator in making the award the Court cannot examine the reasonableness of the 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.

In Municipal Corporation of Delhi Vs. Jagan Nath Ashok Kumar and Another, AIR 1987 SC 2316 : (1987) 4 JT 25 : (1987) 2 SCALE 695 : (1987) 4 SCC 497 : (1988) 1 SCR 180 , it has been held by this Court that appraisement of evidence by the Arbitrator is ordinarily never a matter which the Court questions and considers. It may be possible that on the same evidence the Court may arrive at a different conclusion than the one arrived at by the Arbitrator but that by itself is no ground for setting aside the award. It has also been held in the said decision that it is difficult to give an exact definition of the word ''reasonable''. Reason varies in its conclusions according to the idiosyncrasies of the individual and the time and circumstances in which he thinks. In cases not covered by authority the verdict of jury or the decision of a Judge sitting as a jury usually determines what is ''reasonable'' in each particular case. The word reasonable has in law prima facie meaning of reasonable in regard to those circumstances of which the actor, called on to act reasonably knows or ought to know. An arbitrator acting as a Judge has to exercise a discretion informed by tradition, methodized by analogy, disciplined by system and subordinated to the primordial necessity of order in the social life. Therefore, where reasons germane and relevant for the Arbitrator to hold in the manner he did, have been indicated, it cannot be said that the reasons are unreasonable.

In this case, claims before the Arbitrators arise from the contract between the parties. It is well settled that if a question of law is referred to Arbitrator and the Arbitrator comes to a conclusion, it is not open to challenge the award on the ground that an alternative view of law is possible. In this connection, reference may be made to the decisions of this Court in Alopi Parshad and Sons Ltd. Vs. Union of India (UOI), AIR 1960 SC 588 : (1960) 2 SCR 793 and Kapoor Nilokheri Co-op. Dairy Farm Society Ltd. Vs. Union of India (UOI) and Others, AIR 1973 SC 1338 : (1973) 1 SCC 708 . In Indian Oil Corporation Ltd. Vs. Indian Carbon Ltd., AIR 1988 SC 1340 : (1988) 1 ARBLR 394 : (1988) 2 JT 212 : (1988) 1 SCALE 965 : (1988) 3 SCC 36 : (1988) 3 SCR 426 : (1988) 2 UJ 91 , this Court has held that the Court does not sit in appeal over the award and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusions or if the award is based upon any legal proposition which is erroneous."

In The Hindustan Construction Co. Ltd. Vs. Governor of Orissa and others, AIR 1995 SC 2189 : (1995) 2 ARBLR 1 : (1996) 81 CLT 190 : (1995) 2 JT 561 : (1995) 2 SCALE 105 : (1995) 3 SCC 8 : (1995) 2 SCR 441 , this Court observed on the scope of interference by the Court as follows (at P. 1582 of AIR):-

"It is well known that the Court while considering the question whether the award should be set aside, does not examine the question as an appellate Court. While exercising the said power, the Court cannot reappreciate all the materials on the record for the purpose of recording a finding whether in the facts and circumstances of a particular case the award in question could have been made. Such award can be set aside on any of the grounds specified in Section 30 of the Act."

Bearing in mind, the principles laid down by this Court in the above said cases, if we look into disposal of the matter by the High Court, it would be evident that the High Court has substituted its own view in place of the Arbitrator''s view as if it was dealing with an appeal. That is exactly what is forbidden by the decisions of this Court. Therefore, we have no hesitation to set aside the judgment of the High Court on this issue."

In Sudarshan Trading Company (supra), Hon''ble Apex Court declined to set aside the arbitral award, which was bereft of reasons. The Court held as under:

"29. The next question on this aspect which requires consideration is that only in a speaking award the court can look into the reasoning of the award. It is not open to the court to probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. See the observations of this Court in Hindustan Steel Works Construction Ltd. v. C. Rajashekhar Rao. In the instant case the arbitrator has merely set out the claims and given the 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 came to make the award. In absence of any reasons for making the award, it is not open to the court to interfere with the award. Furthermore, in any event, reasonableness of the reasons given by the arbitrator cannot be challenged. Appraisement of evidence by the arbitrator is never a matter which the court questions and considers. If the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of the 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 the observations of this Court in MCD v. Jagan Nath Ashok Kumar.

The same principle has been stated in Alopi Parshad and Sons Ltd. v. Union of India. There this Court held that the award was liable to be set aside because of an error apparent on the face of the award. An arbitration award might be set aside on the ground of an error on the face of it when the reasons given for the decision, either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous. But where a specific question is referred, the award is not liable to be set aside on the ground of an error on the face of the award even if the answer to the question involves an erroneous decision on a point of law. But an award which ignores express terms of the contract, is bad. Similarly, in Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji, this Court reiterated that an award by an arbitrator is conclusive as a judgment between the parties and the court is entitled to set aside an award if the arbitrator has misconducted himself in the proceeding or when the 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 of the Arbitration Act or where an award has been improperly procured or is otherwise invalid under Section 30 of the Act. An award may be set aside on the ground of error on the face of the award, but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion. The Court, however, went into the question whether the arbitrator had included depreciation and appreciation of certain assets in the value of the goodwill which he was incompetent to include by virtue of the limits placed upon his authority by the deed of reference. The Court found that that was not a case in which the arbitrator had committed an error of fact or law in reaching his conclusions on the disputed questions submitted for adjudication. It was a case of assumption of jurisdiction not possessed by him and that rendered the award to the extent to which it was beyond the arbitrators'' jurisdiction invalid. This was reiterated by Justice Hidayatullah that if the parties set limits to action by the arbitrator, then the arbitrator had to follow the limits set for him and the court can find that he exceeded his jurisdiction on proof of such excess. In that case the arbitrator in working out net profits for 4 years took into account depreciation of immovable property. For this reason he must be held to have exceeded his jurisdiction and it is not a question of his having merely interpreted the partnership agreement for himself as to which the Civil Court could have had no say, unless there was an error of law on the face of the award. Therefore, it appears to us that there are two different and distinct grounds involved in many of the cases. One is the error apparent on the face of the award, and the other is that the arbitrator exceeded his jurisdiction. In the latter case, the courts can look into the arbitration agreement but in the former, it cannot, unless the agreement was incorporated or recited in the award. In Upper Ganges Valley Electricity Supply Co. Ltd. v. U.P. Electricity Board, the respondent had taken over the appellant''s undertaking, but as the parties were at variance on the true market value to be paid to the appellant, the matter was referred to arbitration. As the arbitrators were unable to agree on the question whether the appellant was entitled to compensation for the ''service lines'' which were laid with the help of contributions made by consumers, they referred the question to the umpire. The umpire framed an issue and gave a finding that the appellant was not entitled to claim from the respondent the value of the portion of the service lines which were laid at the cost of the consumers, for the sole reason that they were laid at the cost of the consumers. The appellant filed an application under Section 30 of the Arbitration Act, 1940 challenging the validity of the award on the question. The lower court and the High Court held against the appellant. Allowing the appeal, it was held by this Court that the appellant''s application for setting aside the award could succeed only if there was any error of law on the face of the award. There, it was found, that the umpire had made a speaking award and there was no question of the construction of any document incorporated in or appended to the award. If it was transparent from the award that a legal proposition which forms its basis is erroneous, the award is liable to be set aside."

In BOC India Ltd. (supra), Hon''ble Apex Court has held that it is not open to the Court to set aside the arbitral award when the arbitrator had taken a plausible view on interpretation of contract. The Court has also turned down the plea that this amounts to misconduct by the arbitrator.

I have heard learned counsel for the parties and perused the impugned order as well as the arbitral award.

The issue, with which the Court is concerned in the present appeal, lies in a narrow compass inasmuch as there remains no quarrel that agreement between the parties envisages a clause for referral of dispute to the Arbitrator. Arbitration in the recent past has developed as an effective Alternate Dispute Resolution Mechanism for adjudication of contentious issues between the parties.

Upon perusal of the arbitral award and the impugned order passed by the learned Court below, it clearly and unequivocally reveals that dispute cropped up between the parties, in execution of contract, continued unabatedly. In that background, both the parties, while pressing into service the arbitration clause in the agreement, mutually agreed to refer the matter for arbitration to a sole arbitrator.

The sole arbitrator, who is retired Superintending Engineer, IGNP, after examining the evidence and materials available on record, decided crucial issue No. 2 in favour of respondent-contractor by recording a definite finding that appellants are responsible for breach of contract and the appellant department has failed to carry out its obligation of uninterrupted supply of water and cement during the subsistence of contract. While adverting to Issue No. 3, wherein the respondent has laid a claim worth Rs. 9 lacs, the sole arbitrator has partially allowed the claim and awarded a sum of Rs. 4,08,219 to the respondent-contractor. Similarly, claim for extra lead of sand and unutilized material is also allowed to the respondent-contractor. Idling of labour, machinery and staff is also allowed to the respondent-contractor so also refund of security deposits. While examining the claim of interest, the sole arbitrator has determined a moderate rate of interest @12% per annum. The sole arbitrator has also adjudicated the counter-claim of the appellant department and did not find favour with the said counter-claim by rejecting the same. On final adjudication, the sole arbitrator has awarded a sum of Rs. 5,29,000/- to the respondent-contractor under different heads with simple interest @12% per annum w.e.f. 01.12.1996 uptil its realization.

Appellants, in the instant appeal, have accordingly addressed on the findings of the arbitral award against which their effort under Section 34 of the Act proved abortive before the learned Court below.

The issues relating to damages, claim for extra lead of sand, non-user of the material, idling of labour, machinery and staff, recovery of the earnest money and interest on the claim amount were examined by the sole Arbitrator with bird''s eye view in light of available material and the arbitral Tribunal has found that the respondent-firm is not responsible for delayed execution of the work. As a matter of fact, it is noticed by the Arbitrator that during the currency of contract the appellants did not fulfil the contractual obligation by supplying water and cement in time, which slowed down the work progress eventually causing delay in the completion of work. The sole Arbitrator has also referred to the evidence led by respondent-firm in the form of correspondence made in this behalf to absolve and bail out it for any fault in this behalf. Therefore, in totality, the Arbitrator has found that the respondent-firm has suffered loss due to omissions and commissions of the department. As regards awarding of interest, the sole Arbitrator has recorded cogent reasons for awarding the interest. Taking cognizance of serious lapses on the part of the appellants, the arbitral Tribunal has awarded compensation in lieu of escalation in price. For not refunding the earnest money to the respondent-firm the sole arbitrator has found callousness on the part of appellants. In that view of the matter, the entitlement of the respondent-firm is unquestionable.

It may be observed without any demur that awarding of interest by the Arbitrator is no more res-integra because as per scheme of the Act an Arbitrator is competent to award interest for four stages; viz, (1) from the stage of accrual of cause of action till filing of the arbitration proceedings, (2) during pendency of the proceedings before the Arbitrator, (3) further interest arising between date of award and date of the decree, and (4) interest arising from date of decree till realisation of award. Sub-section (7) of Section 31 of the Act is clear and unequivocal in this behalf, which reads as under:-

"31(7)(a). Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral Tribunal may include in the sum for which the award is made interest, at such rate it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

31(7)(b). A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment."

Therefore, once the Arbitrator records its finding favouring cause of the claimant by way of passing arbitral award for payment of money, its power to award interest at such rate as it deems reasonable is within its sole discretion. Although appellants have questioned the arbitral award for awarding interest as contrary to the agreement but no specific clause of agreement is referred in this behalf. It goes without saying that once breach of contract is proved, an erring contracting party cannot escape from its liability to compensate the sufferer party who has incurred loss due to its omissions and commissions. Section 73 of the Indian Contract Act is crystal clear in this behalf. The legitimate amount of the respondent-contractor retained by the appellants would definitely carry a reasonable interest on the sum which is duly recognized under Section 31(7) of the Act. True it is that Section 34 CPC is not applicable to arbitral proceedings but Section 31(7) duly recognizes awarding of interest for all the four stages. The sole arbitrator, while duly recognizing the right of the respondent-contractor for interest on the amount awarded, has exercised its discretion judiciously to award interest at a moderate rate i.e. 12% per annum, which in the given circumstances cannot be categorized as infirm or dehors the law. Learned Court below has also examined that aspect and has rightly declined to interfere with the arbitral award on this aspect.

If the arbitral award is thoroughly examined on Issue No. 14, it would ipso facto reveal that while relying on the findings on other issues, the sole arbitrator has declined the counter-claim of the appellants by recording a categorical finding that appellant department is responsible for breach of contract. The counter-claim is also examined by the learned Court below and it has also concurred with the findings and conclusions of the sole arbitrator.

Now, I propose to examine the scope and ambit of judicial review of an arbitral award. Under Section 34 of the Act, an arbitral award can be set aside if the aggrieved party has been able to make out a case within the four corners of sub-section (2) of Section 34 of the Act. As a matter of fact, the learned Court below was not obliged to re-assess the evidence on record while exercising its jurisdiction under Section 34 of the Act, but it has taken utmost care to examine the arbitral award threadbare. The learned Court below after examining the award has fully concurred with the findings and conclusions of the Arbitrator by declining to interfere with the arbitral award.

Learned counsel appearing for the rival parties have cited many legal precedents for supporting their cause and all these legal precedents have been elaborately discussed supra to churn out the jurisdiction of arbitrator and scope of judicial review with the arbitral award.

A close scrutiny of the legal precedents referred to by the rival parties makes it amply clear that law on the subject is clear and unequivocal. In arbitral matters, scope of judicial review is very much limited and powers under Section 34 are to be exercised with great care and circumspection. The powers of the appellate Court under Section 37 of the Act are also not akin to powers of a normal appellate Court and while exercising appellate powers, the Court is clothed with the jurisdiction to interfere with the arbitral award in exceptional circumstances, viz., misconduct by the arbitrator, arbitrator has transgressed its jurisdiction, or the arbitral award is dehors the law or public policy.

In the present scenario, phenomena of commercial world are fast emerging. In the commercial world, where time is of essence and large amount of money is involved, the parties prefer to go for arbitration rather than for civil suit. The long gestation period of a civil suit, which meanders through a labyrinth of procedures and, at times, climbs the judicial pyramid, has persuaded the parties to place an arbitration clause in the contract. The scope and ambit of judicial review over an award passed by an Arbitrator are now well settled. The Arbitrator is a Judge appointed by both the parties after reaching a consensus, or a Court appoints him under the provisions of the Act. The Arbitrator is a Judge appointed by the parties; the parties are bound by his decision even if the award is wrong either on law, or on facts. Thus, the decision of the Arbitrator is final unless the reasons given by him are totally perverse or the award is based on wrong proposition of law. A mere error of law on the face of award is not sufficient to nullify the award. If on examining the arbitral award the Court comes to the conclusion that view of the Arbitrator is a plausible one in its award, the same is not liable to be interfered with. It goes without saying that if the interpretation of a contract is a matter solely within the domain of the Arbitrator; the Courts are expected to be weary in interpreting the contract.

My view on scope of judicial review for setting aside arbitral award under Section 34 of the Act finds support from a decision of Hon''ble Apex Court in case of State of U.P. Vs. Allied Constructions, (2003) 3 ARBLR 106 : (2003) 4 CTC 173 : (2003) 7 JT 273 : (2003) 6 SCALE 265 : (2003) 7 SCC 396 : (2003) 2 SCR 55 Supp : (2003) 2 UJ 1454 , wherein Court held as under:

"4. Any award made by an arbitrator can be set aside only if one or the other term specified in Sections 30 and 33 of the Arbitration Act, 1940 is attracted. It is not a case where it can be said that the arbitrator has misconducted the proceedings. It was within his jurisdiction to interpret Clause 47 of the Agreement having regard to the fact-situation obtaining therein. It is submitted that an award made by an arbitrator may be wrong either on law or on fact and error of law on the face of it could not nullify an award. The award is a speaking one. The arbitrator has assigned sufficient and cogent reasons in support thereof. Interpretation of a contract, it is trite, is a matter for arbitrator to determine (see Sudarsan Trading Co. v. Govt. of Kerala). Section 30 of the Arbitration Act, 1940 providing for setting aside an award is restrictive in its operation. Unless one or the other condition contained in Section 30 is satisfied, an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his decision is final. The Court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the Court unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law. An error apparent on the face of the records would not imply closer scrutiny of the merits of documents and materials on record. Once it is found that the view of the arbitrator is a plausible one, the Court will refrain itself from interfering (see U.P. SEB v. Searsole chemicals Ltd. and Ispat Engg. and Foundry Works v. Steel Authority of India Ltd.)."

Reliance can also be profitably made to a decision of Hon''ble Apex Court in case of Sumitomo Heavy Industries Limited Vs. Oil and Natural Gas Commission of India, AIR 2010 SC 3400 : (2010) 8 JT 208 : (2010) 7 SCALE 279 : (2010) 11 SCC 296 : (2010) 9 SCR 176 : (2011) AIRSCW 323 : (2010) AIRSCW 5171 : (2010) 6 Supreme 129 , wherein the Court has held as under:

"41. The view canvassed on behalf of the respondent was that Clause 17.3 ought to be read narrowly like an indemnity clause or given a literal interpretation as in the case of an insurance policy. The umpire on the other hand has observed that this clause is couched in wide terms and it was commercially understandable and sensible, since it was designed to cover a wide and potentially unforeseeable spectrum viz. the likely impact of a possible change in Indian law in future. In the circumstances the approach adopted by the umpire being a plausible interpretation, is not open to interference. The Division Bench was clearly in error when it observed that the view of the umpire on Clause 17.3 is by no stretch of imagination a plausible or a possible view. Perhaps, it can be said to be a situation where two views are possible, out of which the umpire has legitimately taken one. As recently reiterated by this Court in SAIL v. Gupta Brother Steel Tubes Ltd. if the conclusion of the arbitrator is based on a possible view of the matter, the court is not expected to interfere with the award. The High Court has erred in so interfering.

Can the findings and the award in the present case be described as perverse? This Court has already laid down as to which finding would be called perverse. It is a finding which is not only against the weight of evidence but altogether against the evidence. This Court has held in Triveni Rubber and Plastics v. CCE that a perverse finding is one which is based on no evidence or one that no reasonable person would have arrived at. Unless it is found that some relevant evidence has not been considered or that certain inadmissible material has been taken into consideration the finding cannot be said to be perverse. The legal position in this behalf has been recently reiterated in Arulvelu v. State.

In the present case, the findings and award of the umpire are rendered after considering the material on record and giving due weightage to all the terms of the contract. Calling the same to be perverse is highly unfair to the umpire. The umpire has considered the fact situation and placed a construction on the clauses of the agreement which according to him was the correct one. One may at the highest say that one would have preferred another construction of Clause 17.3 but that cannot make the award in any way perverse. Nor can one substitute one''s own view in such a situation, in place of the one taken by the umpire, which would amount to sitting in appeal. As held by this Court in Kwality Mfg. Corpn. v. Central Warehousing Corpn., the Court while considering challenge to arbitral award does not sit in appeal over the findings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as final and binding.

It is an obligation of the parties to a contract that they must perform their respective promises, and if a party does not so perform, the arbitrator or the umpire has to give the necessary direction if sought. In that process, they have to give a meaningful interpretation to all the relevant clauses of the contract to make them effective and not redundant. The intention of the parties in providing a clause like Clause 17.3 could not be ignored. It had to be given a due weightage. This is what the umpire has done and has given the direction to the respondent to compensate the appellant for the amount of the necessary and reasonable extra cost caused by change in law. We have no hesitation in holding that the award of the umpire is a well-reasoned award and one within his jurisdiction, and which gives a meaningful interpretation to all the clauses of the contract including Clause 17.3. In the circumstances in our view the High Court has clearly erred in interfering with the award rendered by the umpire."

Hon''ble Apex Court, while dilating on scope of judicial review of arbitral award, reiterated the same view in case of P.R. Shah, Shares and Stock Broker (P) Ltd. Vs. B.H.H. Securities (P) Ltd. and Others, AIR 2012 SC 1866 : (2011) 4 ARBLR 128 : (2011) 12 JT 290 : (2012) 4 RCR(Civil) 379 : (2011) 11 SCALE 668 : (2012) 1 SCC 594 : (2012) AIRSCW 2317 : (2011) 7 Supreme 249 , wherein the Court has held as under:

"21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second respondent and the appellant are liable. The case as put forward by the first respondent has been accepted. Even the minority view was that the second respondent was liable as claimed by the first respondent, but the appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under Bye-law 248, in a claim against a non-member, had no jurisdiction to decide a claim against another member. The finding of the majority is that the appellant did the transaction in the name of the second respondent and is therefore, liable along with the second respondent. Therefore, in the absence of any ground under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at."

Thus, viewed from any angle, the learned Court below has not committed any error in rejecting the application of the appellants as the reasons given by the Arbitrator are neither perverse, nor based on wrong proposition of law. Moreover, there is no error on the face of award, nor it is dehors the law of public policy. Therefore, I am not persuaded to interfere with the impugned order as well as the arbitral award.

In view of above discussion, in light of factual background of other appeals and the legal position as emerges out from the decisions referred to supra, same would be the fate of other four appeals as that of S.B. Civil Misc. Appeal No. 728/2010.

Resultantly, all these appeals are, hereby, dismissed. Costs are made easy.

A copy of this judgment be placed in all the connected files.