C.R. No. 1679 of 2007 1 IN THE PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH C.R. No. 1679 of 2007 (O&M) Date of Decision : 29.7.2009 M/s North India Prestressors Attwa Sector 42, Chandigarh .......... Petitioner Versus Haryana State Electricity Board, Panchkula ...... Respondent CORAM : HON'BLE MR. JUSTICE VINOD K. SHARMA Present : Mr. P.S. Rana, Advocate for the petitioner. Mr. Narender Hooda, Advocate for the respondent. **** VINOD K. SHARMA, J. (ORAL) This revision petition is directed against the judgment dated 7.11.2006, passed by the learned Courts below vide which the award passed by the Arbitrator in favour of the respondent, has been directed to be made rule of the Court. The respondent- Haryana State Electricity Board ( hereinafter referred to as “the Board”) placed a purchase order No. HH-3108-QH-1992 dated 29.10.1990, for supply of 6000 numbers 8 meter long PCC poles, and 2000 numbers 9 meter long PCC poles. The petitioner failed to supply the material, therefore, purchase was made under risk purchase, by the respondent Board, at risk and cost of the petitioner. C.R. No. 1679 of 2007 2 The claim was disputed by the petitioner. The matter was referred to the learned Arbitrator Sh. S.K. Kohli, Chief Engineer, as a Sole Arbitrator. The arbitrator gave his award on 10.11.1993, accepting the claim of the Board, with interest @ 18% p.a. on the awarded amount, from the date of pronouncement of award. The respondent / Board moved a petition for making the award rule of the Court, wherein the petitioner filed objections under Section 30 of the Arbitration Act, 1940 (for short “ the Act”) for setting aside of the award. The objection raised by the petitioner was that the award was liable to be set aside, as Sh. S.K. Kohli was not appointed, as an arbitrator in terms of the agreement entered into between the parties. It was asserted, that the appointment being bad in law, gave no jurisdiction to the arbitrator to adjudicate the dispute between the parties. The plea raised was rejected by the learned Courts below. Mr. P.S. Rana, learned counsel appearing on behalf of the petitioner, referred to the Arbitration clause, which provides, that in case of a dispute between the parties, the matter was required to be referred to the Sole Arbitrator i.e. Chairman of the Board or his nominee. The contention of the learned counsel was, that the letter appointing Sh. S.K.Kohli was issued by the Legal Remembrancer, and not by the Chairman, therefore, the appointment stood vitiated. On consideration, I find no force in this contention. The reading of the letter issued by the Legal Remembrancer shows, that appointment was made by the Chairman, and the fact regarding appointment C.R. No. 1679 of 2007 3 was only conveyed by the Legal Remembrancer. The contention of the learned counsel for the petitioner, that original letter of appointment was not placed on record, though, the objection in this regard was raised, is of no consequence, as letter itself is very clear. It was for the petitioner to have called for the record to see whether the averments made in the letter were correct or not. Once the reading of the letter clearly showed, that the appointment of arbitrator was made in accordance with agreement between the parties, no fault could be found with the appointment of Sh. S.K. Kohli, as Sole Arbitrator. The contention raised is rejected. The learned counsel for the petitioner contended, that the learned arbitrator misconducted the proceedings by not summoning the letter of appointment. The contention is based on the presumption, that the letter of appointment of arbitrator was necessary to adjudicate the dispute between the parties. In support the learned counsel for the petitioner placed reliance on the judgment of the Hon'ble Supreme Court in the case of K.P. Poulose Vs. State of Kerala and another AIR 1975 SC 1259. The contention of the learned counsel for the petitioner deserves to be rejected. The Hon'ble Supreme Court in the case of K.P. Poulose Vs. State of Kerala and another (Supra) was pleased to hold, that the ignoring of material documents amounts to misconduct. There is no such situation in the present case. Under the Arbitration Act, 1940 the appointment of an arbitrator could only be challenged under Section 33 of the Act and not before the arbitrator. C.R. No. 1679 of 2007 4 Therefore, it cannot be said that the arbitrator misconducted himself in not summoning the record of his appointment. It may further be noticed that the letter of appointment was not such a document which was required for determination of the controversy between the parties. The reliance by the learned counsel for the petitioner, therefore, on the judgment of the Hon'ble Supreme Court in the case of K.P. Poulose Vs. State of Kerala and another ( Supra) is totally misconceived. The learned counsel for the petitioner thereafter contended, that the award as well as the judgment passed by the learned Courts below are liable to be set aside, for want of validity of arbitration agreement between the parties. In support of this contention the learned counsel for the petitioner referred to the offer made by the petitioner, which was said to be valid upto 18.10.1990. The contention of the learned counsel for the petitioner, therefore, was that the purchase order which was placed on 28.10.1990 was after expiry of period stipulated in offer, therefore, there was no valid agreement between the parties. It is the case of the petitioner, that purchase order on 28.10.1990, therefore, could at best be treated to be an offer by the respondent, which was not accepted by the petitioner. Therefore, no valid and existing contract came into existence. This contention of the learned counsel for the petitioner is again misconceived. The evidence on record showed, that on 11.10.1990 a telegram was sent to the petitioner with regard to the decision of the respondent for placing purchase order of the petitioner. The contract stood concluded on C.R. No. 1679 of 2007 5 11.10.1990, and the purchase order placed thereafter was in pursuance to the concluded contract between the parties. It is not in dispute, that there was an arbitration clause in the documents which matured into the contract. It can safely be said, that there was a valid and existing agreement between the parties. The contention of the learned counsel for the petitioner the telegram sent was merely an intention and not decision is again misconceived. In the telegram it was stated as under :- “It has been decided to place the purchase order.” The telegram is ambiguous and clear that the offer made by the petitioner stood accepted by the Board on 11.10.1990 i.e. within the validity period of offer. The reliance by the learned counsel for the petitioner on the judgment of the Hon'ble Supreme Court in the case of Chatturbhuj Vithaldass Jasni Vs. Moreshwar Parashram and others AIR 1954 SC 236, therefore, is also misconceived, as the case of Chatturbhuj Vithaldass Jasni Vs. Moreshwar Parashram and others ( supra) the letters issued had merely set out the terms on which the parties were ready to do business with each other, if and when orders were placed and executed. It was in that situation, that the Hon'ble Supreme Court came to the conclusion that the contract could come into existence on placing of order, whereas in the present case the offer made by the petitioner for supply was accepted and concluded contract came into existence on 11.10.1990. The purchase order issued, thereafter was in pursuance to the contract entered into between the C.R. No. 1679 of 2007 6 parties. The contention of the learned counsel for the petitioner, that the evidence brought on record showed, that by way of purchase, the material was purchased on different rates and not at one rate. Therefore, the claim was liable to be rejected. This plea again is totally misconceived being contrary to the settled law, that it is not open for the Court to go into the merit of the award passed by the learned Arbitrator. The award passed by the arbitrator cannot be challenged on the ground, that the evidence was not properly appreciated by the learned Arbitrator. Even otherwise, in the case in hand the purchases were made, as per availability in the market, once the purchase was proved at a particular rate, at the risk of the petitioner the award cannot be said to be bad, merely because the purchases were made at different rates. The learned counsel for the petitioner also contended, that there was no evidence to justify the findings recorded by the Arbitrator, therefore, the award is liable to be set aside, is again misconceived contention. It is well settled law that insufficiency of evidence cannot be a ground to challenge the award as award, can be only challenged on grounds as given under Section 30 of the Arbitration Act, 1940. The learned counsel for the petitioner finally argued, that the learned arbitrator wrongly awarded interest @ 18% p.a. on the awarded amount, in absence of any agreement between the parties regarding interest. It was contended by the learned counsel for the petitioner, that the respondent claimed interest @ 24 % but no evidence or document was C.R. No. 1679 of 2007 7 placed on record in support thereof but the arbitrator granted interest @ 18% p.a. In support of this contention the learned counsel for the petitioner placed reliance on the judgment of the Hon'ble Supreme Court in the case of State of Rajasthan and another Vs. Nav Bharat Construction Company, 2001(3) Arbitration Law Reporter 561, wherein the Hon'ble Supreme Court on the facts and circumstances of the case was pleased to record as under :- “8. However, considering the dispute involved and overall circumstances of the case, we modify the award qua the rate of interest and reduce the same at the rate of 6% per annum. The arbitrator in paragraph 21.8.1 of the award has granted interest on the principal amount of claims No. 1 to 8 from 1.7.1990 to 30.4.1998 and claims 10 to 18 from 29.4.1991 to 30.4.1998 at the rate of 18% and the district court has awarded interest at the rate of 15% from the date of decree. That part of the award and decree is modified and it is held that respondent claimant is entitled to recover the said amount with interest at the rate of 6% only. The appeal is disposed of accordingly. Parties to bear their own costs of litigation all throughout.” The Hon'ble Supreme Court has not laid down any precedent in the judgment relied upon by the petitioner, with regard to the rate of interest, which could be awarded by the arbitrator. The settled law on the point is, that the arbitrator is competent to grant interest by invoking the C.R. No. 1679 of 2007 8 provisions of Section 34 of the Code of Civil Procedure and also the provisions of Interest Act, in absence of an agreement between the parties. Keeping in view the facts and circumstances of the present case and specially keeping in view the fact, that the claim was based on account of risk purchase made by the respondent, the interest granted in favour of the respondent is modified, by reducing it to 6% per annum on the awarded amount till the date of payment. With the modification in interest the revision petition is dismissed. 29.7.2009 ( VINOD K. SHARMA ) 'sp' JUDGE