Arb.A. 13/2006 BEFORE THE HON’BLE MR JUSTICE T VAIPHEI This arbitration appeal is directed against the judgment dated 26-6-2006 passed by the District Judge, Tinsukia, Assam in Misc. Appeal No. 5 of 2005. Th e facts giving rise to this appeal may be noticed at the outset. The appellant a nd the Union of India represented by the Chief Engineer, Project UDAYAK, BRTF, C /o 99 APO had entered into a contract agreement on 29-1-2002 for supply of steel staging, etc. vide the Agreement No. CE(P)/UDAYAK/11/2001-02. The work was divi ded into two parts. The work order was placed with the appellant on 20-2-2002. A s per this work order, Phase-I of the work (50% of supply) was to be completed b y 20-4-2002 and Phase-II work by 19-6-2002. However, due to some reason, the wor k could not be executed within the stipulated period. The respondent then extend ed the period of execution three times. The first extension was granted till 30- 8-2002, the second extension till 15-10-2002 and the the third extension till 16 -12-2002. Even after these extensions, the appellant could not execute the work completely: only 53.59% of the goods were supplied within the extended period i. e. 16-12-2002. Even thereafter, the appellant accepted few more lots of supplies and the total supplies came to be 79.72% till July, 2003. Finally, notice was i ssued to the appellant vide the letter dated 27-1-2004 directing it to complete the balance work by 16-2-2004, failing which the contract should stand terminate d and the balance work would then completed through other agencies as per Risk & Cost Terms of Clause-28 of the Contract Agreement. After this notice, the wor k order was terminated on 23-3-2004 vide the letter No. 80255/CA/69/E8 (Ext. No. 56) whereupon the balance work was awarded to M/s Sew Steel, Guwahati on 15-6-2 004. The differential amount of Rs. 6,61,660/- was deducted from the final bill of the appellant. The termination of the work as well as the deduction of the sa id differential amount paid to the new contractor under the Risk & Cost clause became the subject matter of reference before the sole arbitrator in accordance with Clause 37 of the Contract Agreement. Shri B.B. Lal, a retired Chief Engine er of the Border Road Organization was appointed as the sole arbitrator by the D irector General of Border Roads vide his letter dated 16-8-2004. Both the partie s took part in the arbitration proceedings. 2. It may be noted that the principal amount claimed by the appella nt before the sole arbitrator was for Rs. 34,83,019/- plus damages for Rs. 15 l akhs by way of loss of reputation and another sum of Rs. 2 lakhs being the cost of arbitration and pendent elite and post arbitration interest @ 18% per annum. It would appear that in the course of the arbitration proceedings, few claims to the order of Rs. 3,49,660/- were withdrawn by the appellant thereby bringing do wn the principal amount claimed to Rs. 31,33,359/-. The sole arbitrator finally awarded a sum of Rs. 9,23,976/- with interest @ 5% per annum. The arbitrator awa rded Rs. 1,42,000 against the claim of Rs. 16,99,168/- by the appellant under Cl aim No. 1,2,3,4,5,6 and 7 under Group ’A’, Rs. 68,000/- against the claim of Rs. 8,30,951/- by the appellant under claim No. 15,16,17,18,19,20 and 21under Group ’C’, Rs. 6,000/- against the claim of Rs. 6,000/- under claim No. 22 of Group ’ D’ and Rs. 6,61,660/- against the claim of Rs. 8,09,872 under claim No. 23 and 2 4 under Group ’E’ together with interest of Rs. 46,315/- at the rate of 5% and a sum of Rs. 18,234/- by way of interest calculated @ 5% for the claim Nos. 1 to 24 and 28 and 29 against the claim of Rs. 3,74,912/- calculated @ 16%. In award ing Rs. 1,42,000/- for claim No. 1 to 7, the sole arbitrator held that the rejec tion of each and every piece of pipe of the lot consisting of 3000 MS pipes on 2 9-11-2002 when samples were already approved on 4-10-2002 was surprising: it is hard to believe that any businessman would try to pass on such a huge consignmen t of sub-standard material in the very first lot costing approximately Rs. 12,84 ,000/- (Total CA amount Rs. 66.166 lacs). The sole arbitrator further held that the appellant had to incur Rs. 42,000/- for transporting back 3000 MS pipes from base of GREF at Dinjan to storeyard of M/s Steel and Grip at Chabua. In additio n, so held the sole arbitrator, the appellant deserved some compensation to offs et the harassment meted out to him and the blockage of his funds till he might have disposed of those pipes to some other customer, for which he awarded a sum of Rs. 1,00,000/-. As for claim Nos. 15 to 21, on similar reasoning, the rejecti on of 1566 pipes of out lot sizes 1778 numbers was unnatural: the evaluation pro cess appeared to be too harsh. He thus awarded Rs. 18,000/- for the expenditures incurred for transporting back 1566 MS pipes from GREF at Dinjan to store-yard of M/s Steel and Grip at Chabua (being one cycle of loading and unloading). He a lso awarded a lump sum of Rs. 50,000/- as compensation to offset the harassment meted out to the appellant and the blockage of his funds thereby making to total compensation under this head to Rs. 68,000/-. The sole arbitrator awarded Rs. 6,000/- for transportation of one truck load (237 numbers) RSJs on 8-5-2002 fro m his store at Chabua to the appellant’s store. As for claim Nos. 23 and 24 for refund of Rs. 6,61,660/ deducted from 3rd RAR as compensation for delay in terms of para 24 of CA and interest, the sole arbitrator held that due to extensions given to the appellant, time was not of the essence of the contract and, therefo re, imposition of penalty of Rs. 6,61,660/- for the delayed supply was unwarrant ed. He, therefore, accepted the claim of Rs. 6,61,660/- plus interest @ 5% per a nnum. The remaining claims were thus rejected. The respondent had also made a c ounter-claim amounting to Rs. 6,61,660/- being the excess cost of supply paid to the new contractor under the Risk & Cost clause of the contract agreement., b ut this claim was subsequently withdrawn as this amount had already been deducte d from the final bill of the appellant. 3. The respondent was, however, not satisfied with the award and fi led an application under Section 34 of the Arbitration and Conciliation Act, 199 6 before the learned District Judge, Tinsukia for setting aside the award. After hearing the parties, the impugned judgment was passed by the learned District J udge. In so far as claim No. 23 is concerned, the learned District Judge upheld the decision of the sole arbitrator directing the refund of Rs. 6,61,660/-, whic h had been deducted from the bill of the appellant for payment to the new contra ctor for supply of the remaining 28% goods under the head of Risk & Cost of Clau se No. 28 of the contract agreement. According to the learned District Judge, wh en the time for completion of the supply was extended repeatedly by the responde nts thereby evidencing that time was not of the essence of contract, such deduct ion was unjust and unreasonable. He further awarded interest @ 5% per annum on t he aforesaid deduction, which is in respect of claim No. 24. Even then, the lear ned District Judge had earlier made the following observations at paragraph 12 o f the judgment: & & & & &.. In the present case, the original value of the contract was that of 66 lakhs and odd. The contractor completed nearly 80% of the work and received his payment. Hence, the value of the remaining 20% was nearly Rs. 13 lakhs. Howe ver, without supply goods for 20% work, the contractor staked a claim of more th an Rs. 42 lakhs and has been awarded nearly Rs. 9,24,000/- as compensation with interest. All these facts and figures indicate that the contractor had the tende ncy to indulge in unfair trade practice to get an exorbitant compensation. Altho ugh the arbitrator has not accepted all the claims but his awarding of Rs. 9,23, 976/- with interest cannot be said to be free from contractor’s undue pressure a nd seeking exorbitant compensation. Hence, I hold that it is a fit case in which I should look into the justiciability of the award. He then proceeded to set aside the compensation/damages awarded by the s ole arbitrator in respect of claim Nos. 1 to 7, 8 to 14 and 15 to 22 in the foll owing manner at paragraph 18 of the judgment: 18. In my considered opinion, once the sole arbitrator hold that the departm ent had adopted a transparent procedure for testing the quality of goods by cons tituting a body of officers, including the Engineer-in-charge, it was not proper for him to grant compensation on the assumption that the contractor must not ha ve supplied inferior quality of goods. I am also of the view that before awardin g any compensation on the ground fof illegal rejection of goods, the contractor should have proved before the arbitrator that the goods supplied were of approve d specification. However, during the arbitration proceeding when the contractor was asked by the arbitrator to produce the sample of goods supplied by them and rejected by the department, the contractor made an untrue statement, as has been noted in Para 29(V) of the impugned award. On such failure of the contractor to establish his case, awarding of compensation for transporting rejected pipes fr om different places to Chabua and the cost of loading and unloading and the mone y blocked in purchase of such goods is not based on evidence. Hence, I hold that the damages/compensation awarded against item No. 1 to 7, 8 to 14 and 15 to 22 are hereby set aside. 4. Assailing the aforesaid observations of the learned District Jud ge, Mr. R. Hussain, the learned counsel for the appellant, contends that his con clusions are based on surmises and conjectures: the entire claim of the appellan t was not for non-execution of left over work but the same include illegal and a rbitrary rejection of certain items. The learned District Judge, maintains the l earned counsel, has completely overlooked the fact that the sole arbitrator was appointed by the respondents, which, therefore, rules out the possibility of exe rting undue pressure from the contractor. It is also contended by the learned co unsel that the learned District Judge could not have re-examined and re-evaluate d the evidence as if he was sitting as an appellate court. The learned counsel f urther submits that the observations of the learned District Judge that all the facts and figures would indicate that the contractor had the tendency to indulge in unfair trade practice to get an exorbitant compensation and award cannot be said to be free from contractor’s undue pressure, are based on assumptions and s urmises and, therefore, perverse. He, therefore, submits that the impugned judgm ent, in so far as it set aside the arbitrator’s award in respect of claim Nos. 1 to 7, 8 to 14 and 15 to 22 are concerned, should be quashed. On other hand, Mrs . R. Bora, the learned counsel for the respondent, supports the impugned judgmen t and submits that the learned District Judge correctly held that the arbitrator grossly erred in awarding the compensation/damages in respect of those claims, which does not call for the interference of this Court. 5. The limited scope of interference by a court of law in the decis ion of the an arbitrator was succinctly reiterated by the Apex court in State of Rajasthan v. Puri Construction Co. Ltd., (1994) 6 SCC 485 by holding that an aw ard is conclusive as a judgment between the parties and the court is entitled to set aside an award only if the arbitrator has misconducted himself in the proce edings or when there is an error apparent on the face of record. This is what th e Apex court said at paragraph 26 of the judgment: 26. The arbitrator is the final arbiter for the dispute between the parties and it is open to challenge the award on the ground that the arbitrator has drawn h is own conclusions or has failed to appreciate the facts. In Sudarsan Trading Co . v. Govt. of Kerala 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 t o 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 0of the jurisdiction. Court cannot substitute its own evaluation of the conclus ion of law or fact to come to the conclusion that the arbitrator had acted contr ary to the bargain between the parties. (emphasis supplied) Whether a particular amount was 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 burde n of saying that this was contrary to the contract and as such beyond jurisdicti on. If on a view taken on 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 t he reasons. If the parties have selected their own forum, the deciding forum mus t 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 t he arbitrator. 6. Judging the findings of the findings of the sole arbitrator on t he parameters laid down by the Apex Court in Puri Construction Co. Ltd., in my o pinion, the learned District Judge has unduly and unnecessarily interfered with in the impugned judgment. Coming to the findings of the arbitrator in respect of claim Nos. 1 to 7, he held that the rejection of each and every piece of pipe ( on 29th Nov 2002) of that lot consisting of 3000 MS pipes by actual checking of thickness, length, inner and outer diameter of each piece in 26 days, when the s amples were already approved on 4-10-2002 was surprising and that it was hard to believe that any businessman would try to pass on such a huge consignment of su b-standard material in the very first lot costing approximately Rs. 12.84. Accor ding to the arbitrator, as a result of the harsh evaluation made by the responde nts, the appellant had to incur infructuous expenditures to the tune of Rs. 42,0 00/- in transporting back and of loading and unloading of 3000 MS pipes from the base of GREF at Dinjan to the store yard of the appellant at Chabua and that th e appellant deserved some compensation to the order of Rs. 1,00,000/- for the ha rassment caused to it and blockage of its fund till the time it would be able to dispose of the same to other customers. In this way, the sole arbitrator had aw arded a compensation of Rs. 1,42,000/- to the appellant. In my judgment, the vie w taken by the arbitrator is a possible view though perhaps not the only correct view. Therefore, the learned District Judge has grossly erred in law in substit uting his view with the view taken by the arbitrator. On a parity of reasoning, the arbitrator also awarded a total of Rs. 18,000/- to the appellant under the h ead of claim Nos. 8 to 14 for incurring unnecessary transportation of the reject ed MS pipes between the two stations and for the incidental loading and unloadin g thereof. He also awarded Rs. 50,000/- for blockage of the fund of the appellan t pending disposal of the rejected pipes to some other customers. Once I have fo und that the views taken by the sole arbitrator in reaching those findings are p ossible views, the logical consequence is that the impugned judgment rejecting t hose claims can hardly be sustained in law. 7. Resultantly, this appeal succeeds. The impugned judgment setting aside the awards made by the arbitrator in respect of claim Nos. 1 to 7 and cla im Nos. 15 to 21 are not sustainable in law and is accordingly set aside. The re maining parts of the impugned judgment shall remain. Let a decree be prepared ac cordingly.