Union of India vs M/s. K.K. Enterprises

Tashi Rabstan, J. - This is a petition tiled by petitioner-Union of India in terms of Section 34 of Jammu and Kashmir Arbitration and Conciliation

Act, 1997 for setting aside award dated 25-7-2011 passed by the Sole Arbitrator Col. Tarun Sharma. The award passed by the Sole Arbitrator

Col. Tarun Sharma. The award passed by the Sole Arbitrator has been challenged on varieties of grounds, which would be adverted to

hereinafter, but before that brief resume of the facts made by petitioner-Union of India, are that Tender was invited by the Garrison Engineer

(South) in April, 1998 for making provisions of augmentation of water supply to 10 Inf. Div. Signal Regiment P.R.O. Unit at Akhnoor, in which

respondent No. 1-Contractor, i.e. M/s. K.K. Enterprises, emerged a successful bidder. His bid was accepted and work aforesaid was allotted to

hi t n. The terms and conditions of execution of the work were laid down in the Contract Agreement executed between Union of India and

respondent No. 1. Petitioner-Union of India contends that respondent No. 1, who was supposed to complete the work within a period of six

months, did not proceed with the work with promptitude and his attitude from the very beginning was un-co-operative and litigation prone. It is

further allegation of the petitioner-Union of India that respondent No. 1 avoided to complete the work on one pretext or the other, which ultimately

forced the petitioner to cancel the Contract Agreement on 25-08-2000 and re-advertise the balance work at I lie risk and cost of respondent No.

Petitioner-Union of India claims that this was done in exercise of powers derived under Contract Agreement. Petitioner-Union of India claims

that for getting balance work executed through new contract, extra expenditure to the tune of 1,45,573.29 was incurred by petitioner-Union of

India. In view of aforesaid development, dispute arose between parties and Chief Engineer, Udhampur, referred the matter to respondent No. 2,

Sole Arbitrator, to adjudicate upon the dispute pertaining to the Contract Agreement aforesaid. Learned Arbitrator entered into the reference on

29-06-2010 and after conducting proceedings, vide communication dated 25-7-2011 has passed the award.

It is this award, which is assailed by petitioner-Union of India primarily on the grounds that the same is against law and facts as well as against

the conditions of Agreement. That the claims of respondent No. 1 were time barred, therefore, Contract No. Ges/AKH-14/98-99 was cancelled

on 25-8-2000. Vide letter No. 8100/GES/AKH-14/98-99/E8 dated 15-9-2001 (Annexure-PB), Union of India invoked Condition No. 70 of

IAFW-2249 for the appointment of Arbitrator to adjudicate the dispute and vide letter No. KE/AKH-14/98-99/54/E8 dated 17-2-2004

(Annexure-PC), respondent No. 1 was asked to forward the claim, if any for onward submission to the appointing authority. The Arbitrator was

appointed in the year 2010 and the Arbitrator entered into reference on 29-6-2010. It is further case of the petitioner-Union of India that the

claims put forth before the Arbitrator were time barred, after thought and were out of the ambit of the Arbitration. The Arbitrator was apprised of

this fact, but, the learned Arbitrator had no concept of Limitation Act and passed the Award dated 25-7-2011, which was not only against the

substantive law but also against the spirit of Sections 18, 24 and 28 of the Arbitration and Conciliation Act, 1987. That Award dated 25-7-2011

is directly against and in conflict with the public policy of the State and requires to be set aside.

Before proceeding to deal with the grounds of challenge taken by the petitioner, it would be appropriate to reproduce Section 34 of the Jammu

and Kashmir Arbitration and Conciliation Act, 1997 as under:-

Application for setting aside arbitral award.

(1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section

(2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if -

(a) the party making the application furnishes proof that -

(i) a party was under some incapacity; or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the

time being in force; or

(iii) the party making the application w as not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was

otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submissions to arbitration of it contains

decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award

which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement

was in conflict with a provisions of this part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this

Part; or

(b) the Court finds that-

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force; or

(ii) the arbitral award is in conflict with the public policy of the State.

Explanation:-Without prejudice to the generality of sub-clause (ii) of clause (b), it is hereby declared for the avoidance of any doubt that an award

is in conflict with the public policy of the State if the making of the award was induced or affected by fraud or corruption or was in violation of

Section 58 or Section 64.

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had

received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the

arbitral Tribunal;

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of

three months, it may entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under subsection (1), the Court may, where it is appropriate and it so requested by a party, adjourn the

proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take

such other action as in the opinion of arbitral Tribunal will eliminate the grounds for setting aside the arbitral award.

What emerges from section 34 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997, is that jurisdiction of the Court to set aside

the award passed by the Arbitrator is very limited and the same cannot be interfered with except on the grounds prescribed under Section 34 of

the Act. It is well settled that the Arbitrator is the sole Judge of the facts and law of a dispute referred to him for adjudication and award. The

award cannot be interfered unless illegality is apparent on the face of the record or that it is opposing the public policy. The Court in exercise of

powers under Section 34 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997, cannot sit as a court of appeal over the findings of

the Arbitrator and the Court would be loath to interfere with the findings of facts, even if these are erroneous, unless there is illegality apparent on

the face of the record.

In light of the aforesaid position, the grounds of challenge taken by the petitioner need to be considered.

The primary ground taken by the petitioner-Union of India is that the claims of the contract preferred by respondent No. 1 were time barred, as

such, the same could not have been granted by the learned Arbitrator. It is contended by learned counsel for the petitioner that the contract-in-

question was cancelled on 25-08-2000 and learned Arbitrator was appointed in the year 2010, who entered into the reference on 29-06-2010.

Petitioner-Union of India maintains that the claims, based upon the Contract, which was cancelled on 25-08-2000, could not have been preferred

after almost a decade, as such, barred by limitation. It is, thus, contended by learned counsel for the petitioner-Union of India that while

entertaining time barred claims, the learned Arbitrator has committed an error, apparent on the face of the record, which rendered the award

passed by him to be set aside.

Arguments put forth by learned counsel for the petitioner-Union of India fall under its own weight. As is evident from the record as well as

pleadings, contract-in-question was, no doubt, cancelled on 25-8-2000, but respondent made a request for appointment of an Arbitrator vide his

letter dated 15-1-2001, which request of respondent No. 1 was, however, not acceded to immediately by the appointing authority. It is the

appointing authority, which took inordinate time to appoint the Arbitrator, which delay is not in any manner attributable to respondent No. 1. Since

dispute was raised immediately after cancelling the Contract Agreement and request was made in the year 2000, as such, the claims adjudicated

upon by the learned Arbitrator cannot be said to be time barred. Reference in this regard is invited to Section 21 of the Jammu and Kashmir

Arbitration and Conciliation Act, 1997 which deals with the commencement and completion of arbitral proceedings. For facility of reference

Section 21 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 is reproduced here as under:-

Commencement and completion of arbitral proceedings.

Unless otherwise agreed by the parties the arbitral proceedings in respect of a particular dispute, -

(a) shall commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent; and

(b) shall be completed within a period of four months from the date of its commencement under clause (a).

Arbitral proceedings, as what is stipulated by Section 21 of the Act, qua a particular dispute, would commence on the date, on which a request

for reference of the dispute to the Arbitrator is received by the respondent. That being the position, arbitral proceedings in the instant case cannot

be said to have commenced when the request made by the claimant was received by the UOI for appointment of an Arbitrator. From the record, it

appears that the request was made in the year 2001. As a matter of fact, the petitioner in ground 3 of the petition has admitted that the claimant

invoked the arbitral clause on 15-9-2001. To the plea of respondent, that he too had requested the appointing authority to appoint the Arbitrator

on 15-1-2001 has not been specifically denied by the petitioner-Union of India. In any case, steps for referring the dispute to the Arbitrator were

taken in the year 2001 initially and thereafter on 17-2-2004. Ultimately, the Arbitrator was appointed in the year 2010. It is only after Arbitrator

entered upon the reference, parties were obliged to file their claims. In this background and the plea of the petitioner-Union of India that the claims,

which were filed in the year 2010, were time barred, cannot be accepted. Time taken for following the procedure of appointment of Arbitrator

cannot be excluded by the proceeding as to whether the claims adjudicated upon by the learned arbitrator are barred by limitation or not.

Therefore, this ground taken by the petitioner-Union of India to challenge the impugned award, fails.

The petitioner has also challenged the award on the ground that the same violates different Sections of the Jammu and kashmir Arbitration and

Conciliation Act, 1997 particularly, Sections 18, 24 and 28. Without elaborating much and without pleading any material particular, therefore, the

aforesaid grounds are not tenable.

There is a bald assertion made by the petitioner-Union of India to challenge the award by claiming that the award passed by the learned

Arbitrator is in conflict with public policy. However, the petitioner-Union of India has not explained as to how the award passed by the learned

Arbitrator is against the public policy. Public policy has been well explained in numerous decisions of the Hon'ble Apex Court as well as this

Hon'ble Court. How the impugned award falls within the parameters laid down by the Hon'ble Court for declaring the award to be in conflict with

public policy has not been elaborated. In absence of specific pleadings, aforesaid ground of challenge is not worth to consideration.

Rest of the grounds of challenge pertains to appreciation of evidence, which this Court would not be in a position to do, for the reason, that this

Court while exercising powers in terms of Section 34 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997, cannot sit in appeal

against the findings and fact of law arrived at by the learned Arbitrator. Learned Arbitrator, being Judge of the choice of the parties, has been given

adjudicatory powers by the parties to decide the dispute on its own wisdom and wisdom of Arbitrator cannot be substituted by this Court unless

the Award is shown to be suffering from the error of law and facts apparent on the face of the record or that the award passed is in conflict with

public policy. No ground has been demonstrated by the petitioner-Union of India in this petition. However, an alternative plea raised by the

learned counsel for the petitioner-Union of India, during the course of arguments that with regard to validity of the Partnership Deep dated 31-5-

2010, whereby respondent firm was re-considered. Since this plea of the petitioner-Union of India is purely a question of fact, the same cannot be

looked into unless there are specific pleadings made by the petitioner in this regard and an opportunity is granted to respondent No. 1 to rebut the

same.

In that view of the matter, alternative plea raised by the petitioner-Union of India, cannot be taken note of and therefore, cannot be made graft

ground to challenge the Award, which is otherwise found to be in-consonance with law.

Viewed thus, this writ petition fails and is accordingly dismissed along with connected MP(s).