State of West Bengal vs Techno Design

Amitava Lala, J.—The Court this is an application u/s 30 and 33 of the Arbitration Act. The contention of the Petitioner challenging the award is that the Arbitrator finding is without any materials. The Petitioner contended that the Arbitrator can decide the issues if some materials are there but when there is no material court can construe that the finding of the arbitrator without materials is out come of perversity. The Petitioner further contended that documents which were filed before the Arbitrator must have to be proved. The Petitioner also contended that the Arbitrator, before coming into conclusion about payment of damages did not consider as to whether the recission of contract was justified or not.

In support of the contentions Mr. Bikash Bhattacharjee, Learned Senior Advocate appearing with Mr. Udayan Sen, relied upon two judgments AIR 1871 S.C. 1865 and 1949 and AIR 1952 Cal. 440 amongst others on different points.

By citing above two judgments they contended that mere marking of a document as an exhibit does not dispense with its proof. They further contended that if a witness proves the contents of a letter written to him my another, the letter is relevant and admissible to the extent of the factual contents but the correctness of the contents of letter can only be proved by examining other written such letter. In case of breach of contract and measure of damages an arbitrator has to consider extension of due date, if any. If the Arbitrator has given damages on a wrong basis the award will be bad from the face of it implication of arbitrator''s own opinion as expart in law trade without any evidence as in the above will be misconduct of the arbitrator in the proceeding.

Secondly and incidentally they contended that no observation was made by the Arbitrator in the award as to whether termination of contract was justified or not, in other words there was no proof of termination. The very vasis of the award is bad the face of it.

There is no question of discussion of the second point afresh since such question is merged with the first point and in all made the point as to whether the recission of contract was justified and what is the observation of the arbitrator to that effect before coming into the question of damages.

They also taken further points as stated below:

The award is lumpsum award.

The arbitrator travelled beyond the contract which leads to award without jurisdiction.

On the aforesaid points several judgments were cited by them. In the case of Associated Engineering Co. Vs. Government of Andhra Pradesh and another, they relied upon paras. 23, 26, 27 and 29 to establish that travelling beyond the scope of the contract is jurisdictional error and such error needs to be proved by evidence extrinsic to the award. It is open to the Court to see what dispute was submitted to him in order to ascertain the jurisdiction. If it is not clear from the award, it is open to the Court to have recourse to outside sources. The Court can look at the affidavits and pleadings of the parties; the court can look at the agreement itself. They also cited another judgment being Trustees of The Port of Madras Vs. Engineering Constructions Corporation Limited, therein which has only negative argurriental value. They have also submitted by citing a judgment being Tamil Nadu Electricity Board Vs. M/s. Bridge Tunnel Constructions and others, that when there is question of Jurisdiction of the arbitrator is involved as to the arbitrability, arbitrator should give reason instead of making non-speaking lumpsum award so that one can understand which part of the claim within and which is outside the contract. They have also cited case of Prabartak Commercial Corporation Ltd. (1991)1 S.C. 498 to establish factually that when dispute cannot be decided finally by the Superintending Engineer such dispute cannot be referred to arbitrator and in such case entire proceedings before the arbitrator including his award will be null and void.

Mr. P.K. Roy, Learned Counsel appearing for the Respondent contended that the arbitrator neither travelled beyond the jurisdiction nor there was no proof of illegal termination nor there was no material before the arbitrator. In support of his submission he placed all the conditions of contract and minutes of the meetings held by the arbitrator filed before this Court with the award.

Initially this Court was inclined to confine himself in the award although Court has every power to look into the documents connected with the award. However, when the question of jurisdiction of the arbitrator was raised, the Court has checked up conditions of contract, minutes of the arbitrator to come to an appropriate finding.

Ultimately this Court perused the condition No. 2 of the conditions of contract since lot of questions arose as to arbitrability by the arbitrator in this respect. From the construction it appears that claim is in respect of compensation due and payable by the claimant/contractor to the State Authority in case of default in his part. Therefore this Clause has got nothing to do with regard to payment of any amount due and payble by the authority to the claimant/contractor as Claimed before the arbitrator. Similarly in Clause 12 of the condition of contract definitely gives power to the Superintending Engineer of the Authority to fix rate of the items of the work, but the Respondent authority, itself submitted before the arbitrator that if the superintending engineer fails to apply this provision in the dispute as per Clause 12 of the agreement, the arbitrator, under Clause 25 has got power to intervene on that point. Therefore it is presumably acceptable that Superintending Engineer failed to apply the provision.

The Petitioner herein being Respondent further contended before the Arbitrator that if the termination be deemed justified by the learned Arbitrator than the claim has no bearing. Otherwise he may grant any reasonable payment.

At first Mr. Roy cited a judgment Gambhirmull Mahabirprasad Vs. The Indian Bank Ltd. and Another, and relied upon paras. 66, 73 and 77 which was also followed by Deo Kumar Saraf v. Union of India 1988 (2) C.L.J. 325 and also relied upon head notes therein to extablish that in a question of breach of contract, damages can be proved, measured and awarded. But if the damages are not satisfactorily proved due to lack of evidence. Arbitrator is entitled to award damages on any reasonable basis, even on the basis, even on the basis of mere guess work.

He also referred Union of India (UOI) Vs. D. Bose and Others, therein to show that though no document was proved strictly in accordance with the principles laid down in the Evidence Act before the arbitrator but it should be noted that various documents were produced before the Arbitrator is support of the case and there was ample evidence for the arbitrator to act upon. The question of legal or admissible evidence does not arise before the Arbitrator unlike England, where the law of Evidence should be strictly followed before the Arbitrator.

Therefore, situation like above can not be construed as a case of no evidence at all before the Arbitrator to form an opinion that the award is erroneous on the fact of it.

Mr. Roy also cited Sudarsan Trading Co. Vs. Government of Kerala and Another, to reiterate established principles i.e. (a) Probe is the mental process of the Arbitrator, (b) in an absence of the reasons it is not open to the Court to interfere with the award; (c) reasonableness of the reason of the arbitrator can not be challenged; (d) apprisement of evidence by the Arbitrator can not be a matter before the Court; and (e) Arbitrator is sole judge of the quality and quantity of evidence and it is not open to the Court to adjudge such evidence.

In both the cases ratio of the judgment of Chanpsey Bhara reported in AIR 1923 Privy Council 66 : 50 Indian Appeal 324 were followed although the same was formally placed.

He also cited a single Bench decision of this Court Union of India Vs. Abhoy Sarkar and another, where in the Learned Judge held that interpretation of the contract is the domain of the Arbitrator. Therefore although a Clause prohibits compensation but even whether the claimant is entitled in other from of compensation is also domain of the arbitrator. There is no question of legal misconduct.

By citing para. 4 of judgment The Board of Trustees for the Port of Calcutta Vs. Engineers-De-Space-Age, he stated although Clause of a contract prohibits payment of interest, Arbitrator can consider and there is no mistake in awarding interest by the Arbitrator.

I have carefully considered the rival contentions of the parties in coming to conclusion.

It appears to me that primary point of argument of the Petitioner is that the award is based on no materials specially in proving the recission of the contract and secondary point is arbitrator has travelled beyond the contract. In all award is bad from the face of it as well as arbitrator exceeded the jurisdiction. Trumph cards of the first limb of argument is mostly based on facts wherein second limb of argument is based on law and that too upon latest Supreme Court judgment Tamil Nadu Electricity Board Supra.

The argument of the Respondent on the first limb is as usual probe is the mental process of the arbitrator. Court cannot feaprise the evidence, Court is not sitting in appeal in considering application for setting aside an award etc. Which are very common now a days. So far the second limb is concerned the argument of the Respondent, as I have understood, interpretation of the contract is the domain of the arbitrator and above all when law directs arbitrator to do certain work within the parameters, contract can not override the same. In other words there cannot be any estoppel against the statute.

According to me, in between two limbs of argument, second limb has command over the first limb provided facts of the case can be fitted with the judgment Tamil Nadu Electricity Board Supra. If the facts are poorer I have to take care of first limb of argument but if the facts are not poorer there is no necessity to travel into the question of first limb.

Since the question of jurisdiction of the arbitrator is involved herein I am entitled to peruse all the documents in connection with the arbitration proceedings and I have done so. As to what clienches the mind of the Court is that the scope and amit of the Clauses 2 and 12 of the contract. Such Clauses can not control the authority of the arbitrator in this respect. Clause 2 deals with payment by the claimant/Contractor to the Respondent but not other way round. Clause 12 deals with fixation of rate by the Superintending Engineer but he had not fixed any rate under Clause 12 so that exceptional Clause can be applicable. Therefore Arbitrator was well within the jurisdiction in deciding the issues. 2nd limb of the argument goes. Consequently applicability of the Tamil Nadu Electricity Board Supra can not find place herein.

In the premises task of the Court become much easier as the scope of argument on the first limb is nerrower on the basis of various judgments of the Supreme Court and High Courts and I am not prima facie satisfied that there was no material before the arbitrator to come to justify breach and to make an award in favour of the claimant/Respondent. I cannot compel the arbitrator to express the probe which is a mental process of the Arbitrator.

Under these circumstances I have no other alternative but to hold in favour of the Respondent. Balance of convience speaks for the same.

Therefore, this application is dismissed but no order is passed as to costs.

As a consequential effect of the dismissal of the application, there will be decree in tens of the award. The Decree will carry interest @ 12% per annum from the date of the decree till realisation of the decreetal dues by the Respondent. Costs assessed at Rs. 5,000.00 Decree will be drawn up expeditiously.

Department and all parties are to act on a signed copy minute of the operative part of the order.