Union Of India (uoi) v. Stelco Engineers And Anr

Swatanter Kumar, J.

1. By this order, I would dispose of CS (OS) No. 191A/98 filed by the petitioner praying that the arbitrator-respondent No. 2 be directed to file the original award dated 4th December, 1997 along with the proceedings in this Court. Further it is prayed that the award be made rule of the Court and petitioner be granted interest @18% per annum from the date of award till payment.

2. During the pendency of this petition, the arbitrator had filed his award along with the proceedings. Notice of filing of award was issued by the order of the Court dated 12th August, 1998, which was subsequently served upon the parties. Objections under Sections 30 and 33 of the Arbitration Act, 1940 were filed on behalf of the respondent which were registered as is 24/1999. Reply to these objections was filed on behalf of the petitioner.

3. Nobody has been appearing on behalf of the objector since 3rd November, 2004. The Court on 21st September, 2005 has passed the following order:-

This case was passed over twice and has been called out for the third time today. Nobody appears on behalf of the Objector-respondent. Nobody has been appearing on behalf of the objector since 3rd November, 2004. The objections to the award were filed on 2nd January, 1999.

In the circumstances afore noticed, no useful purpose would be served by dismissing the objections in default as such I have heard learned counsel for the petitioner on merits.

Arguments heard. Order reserved.

4. I have perused the objections filed on behalf of the objector. Challenge to the award is mainly founded on two counts viz. (a) the counter claim filed by the respondent/objector has been rejected by the arbitrator without any reason and (b) the award is a non-speaking award as no reasons have been given in the award even for allowing the claim of the petitioner. Before the merit of these contentions is dealt with by the Court, reference to certain basic facts would be necessary. The petitioner-Union of India had invited tenders for supply of MS Side Split Cotters for C.I. Sleeper on 3rd February, 1988. The respondent/objector submitted their tender on 30th January, 1988. The same were accepted by the petitioner for the supply of 10 lacs numbers of split cotters at the rate of Rs. 2.70 per piece for Ghaziabad. Pursuant thereto, a purchase order dated 28th July, 1988 was placed upon the respondent and delivery period was fixed as 3rd September, 1989. This purchase order was subsequently amended to as 12,50,000 numbers with all other terms and conditions remaining unchanged. There was some disputes between the parties with regard to security deposit and the respondent/objector was called upon to deposit a sum of Rs. 1 lakh even though they were entitled to exemption. They could not start supplies and vide their letter dated 21st January, 1989, they had informed this fact to the authorities and prayed for extension of delivery period. Vide letter dated 4th April, 1989, which according to the respondent/objector contained invalid terms, a penalty was claimed for providing of extension and for belated delivery. The goods were purchased by the Union of India at the risk purchase of the respondent/objector and they claim a loss of Rs. 10,62,375/-. According to the respondent in view of the judgment of the Supreme Court in Security and Finance (P) Ltd. and Anr. v. Dattatraya Raghav Agge and Ors. and the fact that risk purchase could be availed of within 9 months, the claim of the Union of India was without any basis.

5. The matter was referred to arbitration. Respondent No. 2 acted as the Sole Arbitrator and vide his award dated 4th December, 1997, he allowed the claim of the Union of India but rejected the counter claim of the respondent/objector to the extent of Rs. 5,06,250/- and filed the award in this Court. The correctness and legality of this award is questioned and challenged by the respondent/objector in is 24/1999. The arguments raised on behalf of the respondent/objector are without any merit. Much less in the proceedings before the arbitrator even in the present objection petition, the respondent/objector has practically conceded the default on his part in not being able to supply the demanded goods within the delivery period. In the objection petition it has been specifically stated that vide letter dated 21st January, 1989 the respondent had informed the Union of India of their ability to perform the contract within the stipulated period i.e. 3rd March, 1989. Even the enhanced quantity could not be supplied. One of the stated reasons is that they were asked to furnish the deposit of Rs. 1 lakh in terms of letter, which, according to them, was unfair and inequitable. The other reason for non supply was increase in the ordered quantity, which was abrupt and without prior ascertainment from the respondent/objector. Reference is also made to the fact that the machine of the objector had broken down, which further lead to the problems. All these reasons are not the acts which were not known or could not be reasonably apprehended by the respondent/objector. The additional supply and demand of deposit was in conformity with the letter and contract already executed between the parties. The breaking down of the machine could no way be attributable to the Union of India. The arbitrator of course did not give any detailed reasons and declined the counter claim raised by the respondent/objector. The claim of the petitioner/Union of India for Rs. 10,62,375/- was allowed by the Arbitrator limited to the extent of Rs. 2 lakhs while the counter claim of the respondent/objector to the extent of Rs. 5,06,250/- was totally rejected. Before coming to the conclusions, the arbitrator had gone through the arguments of the parties and the the complete record produced before him. It could not be said that the conclusion arrived at by the arbitrator was without any basis and was not based upon the evidence on record. The arbitrator is not expected to write detailed orders but there should be apparent nexus between the conclusions arrived at and the record produced before the arbitrator. The jurisdiction of the Court to interfere in the award for want of reasoning under provisions of the 1940 Act was a very limited one. Unless the award was not supported by any evidence or was erroneous in law, the same could not be interfered with only on the ground that it did not provide detailed reasons. In fact this was not even obligatory on the part of the arbitrator to give detailed reasons. Reference in this regard can be made to the judgment of the Supreme Court in Gujarat Water Supply and Sewerage Board v. Unique Erectors (Gujarat) (P) Ltd. and Anr. and Indian Oil Corporation Ltd. v. Indian Carbon Ltd. . At this stage, reference can also be made to a recent judgment of this Court passed in OMP No. 222/99 decided on 8th September, 2005 where the Court had discussed at some length the scope of reasoning to be given by the Arbitrator. The relevant portions of the judgment reads as under:-

Furthermore, reference can also be made to the judgment of the Supreme Court in Arosan Enterprises Ltd. v. Union of India and Anr., where the Court clearly held that under Section 30 of the old Act the findings of the facts recorded by the Arbitrator based on appreciation of material on record would not be interfered by the Court in such proceedings. The scope of Section 30 of the old Act was apparently much wider than the scope of the objections under Section 34 of the present Act. The objector must essentially satisfy that the objections are relatable to and are covered under any of the Clauses of Section 34 of theand a general talk of the content and conclusion of the award would not be satisfactory cause for interference by the Court. The main thrust of the submissions on behalf of the objector was that the contractor had done no work at the site and as such he was not entitled to any damages for non-performance or on account of the material and machinery collected at the site....

The learned Counsel appearing for the Objector while relying upon the judgment of the Supreme Court in the case of O.N.G.C. v. Saw Pipes Ltd., contented that the findings are not based upon any evidence and in fact are contrary to law. Merely referring to the judgment would not suffice. The objectors have failed to administer before the Court from the record of the arbitrator as to what claim is against law and is not based upon evidence. This Court while entertaining objections against the award does not sit as a Court of Appeal which would interfere with every findings of fact or finding of the law. The provisions of Section 34 of theare to be construed strictly and once the legislature in its wisdom has prescribed limitation for setting aside of arbitral award the objector must essentially show that he is covered by either of the grounds stated in those provisions. The claims were referred to the arbitrator and every claim which has been granted by the Arbitrator has been so asked for by the Claimant in his statement of claim and was duly discussed by the Arbitrator in the daily proceedings. The objections filed by the objector for all purposes and intent, challenges the finding of facts recorded by the Arbitrator. The scope of challenge besides being limited is not covered in the case of the petitioner by any of the provisions of Section 34 of the.

6. In the facts and circumstances of the present case, it cannot be stated that the award of the arbitration is without any reason or is a non-speaking award and to the extent that it would call for interference by this Court. This Court does not examine the award as it was a Court of appeal. The award is supported by the evidence. None of the conclusions arrived by the arbitrator are contrary to the record or law. They are neither erroneous nor without jurisdiction. In fact even the case of the objector before this Court would by and large support the findings given by the arbitrator.

7. For the reasons aforestated, the objection petition being IA. 24/99 is dismissed. The award filed by the arbitrator is made a Rule of the Court. The petitioner would be entitled to get interest @6% per annum from the date of filing of the award in this Court till realisation of amount. The registry shall draw a decree in terms of the award.

8. The suit and is 24/99 are finally disposed of while leaving the parties to bear their on costs.