1 448 1 e IN THE HIGH COURT OF PUNJAB 8 HARYANA AT CHANDIGARH 0 t7 Civil RevisionNoe3156 of2008 OSiMl CR315609vt oJq daled i Date ofdecisionl January12 2010 VarunMittal andothers Petitioners Vs PunjabStateIndustrial Limited 1 0 CiviI Revision Noe 5412 of2008 OSM C PuniabStateIndustrial Limited eePetitioner Z Vs VarunMittal and others I 06 Coram Honble Mr Justice AeNeJindal OO Present Mr R Advocatewith 7 Mr AjayKaushik Advocate for the in R N03156 of2008 andfor the in CR N05412 of2008 Om Mr Salil SagarSr Advocate with Ms Kaur Advocate for the in CR N03156 of2008 andfor the in R No412 of2008 4 8 4t AeNeJindal J This of mine shalldispose of two connectedpetitions N3156 of 200Varun Mittal and others VS PunjabState Industrial and N03412 of 2008 PunjabState Industrial 1 Corporation Varun Mittal and others9preferredagainst VSe the order dated303008 passedby the IearnedAdditional District Judge partlysettingaside the order dated 1462007 passedby the Civil Judge0r Division9 dismissing the objectionpetition Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 449 Civil Revision Noe3156 of2008 8L Civil Revision Noe 5412 of 2008 m preferred bythe PunjabStateIndustrial and making the award dated 313 002 passedbythe Honble Mt Justicei RC Nehru RetdOthe sole arbitratoras rule ofthe court The crucial questioninvolvedin the presentrevISlOIl petitions 1S whether the arbitratorwas withinits to award pendente lite and future interestat the rate and whether Section 5 of the Limitation Act is applicable to the petitionfiled under 1 Section34 ofthe ArbitrationActT 0 Unfortunateand apathy ofthe presentcase isthatthe 0 who have its roots of over interest earninghugeinterest by C 1 loansand settledto pay intereston the amount for which it was C1 under debt is shirking to pay the agreed lnterest The gravityof concern 1S that the courts while overlooking thescope of to be entertained underSection34 0FtheAct set to each and every to Z the award the status competencyand credibilityof the r arbitrator resultantly the courts remaln Oooded with litigationwhile the corridors of Arbitrator and destroying his I Thousandsof petitions under the old Act of 1940 which stood already 08 replacedby the Act of 1996 are stillinghanging on frivolous lssueSe The scope of interferenceinto arbitratorsaward always remained W2 into controversydespite the dictumgivenbytheHighCourt time and again thatthereasonedaward passedwith reasonabieness could not be set aside and Section30 mandatesthe Court not to set asidetheawardon thegrounds other than those specifiedunder Section 30 of the Act When once it is found that the view taken by the Arbitratoris the possibleview the court should be reluctant to interfere with the same Similar observationswere rnade in case Steel Authorityof India Limited VS GuptaBrother Steel TubesLimited 2010 0 RCR iviO102 whereinitwas observedas under 14 32 Once the arbitrator has construed clause 72 in a particularmanner and such construction lS not absurd and appears to beplausibleit is not open to the courts to interfere with theaward ofthearbitrator LegalpositionIs no more res Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 450 Civil Revision No 3156 of2008 8z 0 Civil Revision Noe5412 of2008 3 2 integrathat the arbitratorhavingmade the finalarbiter of resolution of disputes between the partiesthe award Is not l opento challenge on thegroundthatarbitratorhasreachedat a wrong conclusion The courts do not interfere with the conclusion of the arbitrator even with regardto construction of a contract if it is a possibleview ofthematter The words no award shall be set aside Il Section 30 mandates the In 1 courts not to set aside the award on the groundsother than 0 thosespecified in Section 30 In a case such as this where the 0 arbitrator has given elaborate reasons that compensation C clause 72 is not attractedfor the brebchesfor which the has been claimed by the and such Z Vlew of the arbitratoris a possibleVlew we are afraidin the circumstances award is not amenableto correction by the Z court 17 The facts in the back groundof the case are that the Punjab I StateIndustrial Limited herein referred as the otj CO underthe Act 1956came intobeing for thepromotion and of the industriesin the Stateof Punjab 7 2E Mls PunjabSpinningand WeavingMills Limited lerein referred as the r3 was one ofthe bythe andit set Clm up a Textile Spinning Mill at Dabwali Road Bathinda The held the whole ofthe issuesand paidup capitalofthe company coinprising 2400000 llly paidup equitysharesof Rs l On each but later on the decided to make disinvestmentbysellingthe shareholding111 company of Sh HB Vyas Director DebingTextile Private Limited Chambers 213 Nariman Point Bombayand also to his nominee 1 1 Shri OnkarMal Mittal Chairman and ManagingDirector Jubilee Finance Private Limited lerein referredas the claimant9Havingundertakento either themselvesor through their associatesor noininee 900Ioof the aforesaidshare holdingin the company it was settled between the as well as the claimant Onkar Mal Mittallthat the shares would be sold Rs1850 per fullypaidup equityshareofRs101 each Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 451 Civil RevisionNoe 3156 of2008 0 Civil Revision Noe 5412 of2008 4 An agreementdated 92 1982 was executed the mode of payment ofthe purchase money as also the assets and liabilities of the company The claimant was required to pay the sale pricein instalments andthe tlrstinstalmentof 113 ofthe priceofRs1296 lacswas to be paid by the claimantto the by 93 1982 a sum of Rs65 lacs was paidas the first instalmenton 93982and some ainount was paidlater on However Iateron a agreementdated m 21A1982 was also executed But on 30A982 the cancelled the above agreementsand agreedto sell the above equityto one OP 0 Taneja As such a dispute arose betweenthe parties on C 258986 partiesenteredinto an settling the entire litigation at C5 rest and it was agreedthat the as well as the claimant would X withdrawall the civil as well as criminallitigationIt was agreed thatthe amountofRsA8 lacs shallberepaidto Onkar Mal Mittal by 1987 Z and the balance of RsA3 lacs was to be paidby the in the a suitableinstalmentsofRs90 lacseach month The total ainount was to be paidbyAugust1987 As regards theinterest on thedefaultedamount the I matter was to be referredto the arbitrator The relevantclauses 08 payment as in the agreement are as under 1 lI4ittal has paid total sum ofabout Rs 91 lacninetv one IW lakhs to the Corporationtowards thepurchasePriceof the shares of the Againstthe same the tl Corporation has sharesof thefacevalue of about R4800 Oortyeightlakhsto Mittal andlor his nomlnee The said amount of Rs91 lakhs shall be returned to Mittal andlor his nominees by the as stated Shri Mittal may get the sharesheld byhis nomtnees transferred in his name beforehanding over the share scripsand blank share transferdeeds dulyexecutedbythe Transferors to the Corporation al The sum ofaboutRsA8 lakhs will be repaidbyFebrualy 1987in monthly instalmentsofaboutR90 lakhs we the datehereof against byMittal andlor hls Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 452 CiviI Revision Noe3156 of2008 Si 0 Civil Revision Noe 5412of2008 a5 nominees to the andlor its nomineesshares of the of the facevalue which have beenpreviously bythe Corporation to them bI The balance of about 43 lakhs will be paid by the Corporation to Mittal in suitableinstalmentsof Rs7 lakhs each month the total payment to be made by 1 August1987 As regards thereferring the matter to the arbitratorclause8 has 0 been whichreads as under C 8 Shri Onkar Mall Mittal has vide his letter dated 5 5 August1986 claimed interest on the amount of Rs 91 lakhs I amorox paid bv himlhisassociatesto PSIDC from the date of Pavment to the date of fuU and fnal Davment which lS Z disputedand not bythe CorporationThe parties C agree that the said in respectof the amount of RsA3 lakhsonlyforwhich sharescould not betransferred by I the to Shri Mittal andlor his associatesshall be 08 10 referredto the sole arbitrator of a mutuallyagreedretired Judgeof the Delhi OR Pzmjab cOHaryanaHigh Court for 2 decision as per the agreementsdatedthe 9 February and 2ISI m April 1982 The provisionsof Arbitration Act 1940 shall applymutatisand Inutandisand the decision oftheArbitrator tn this regardshall bebinding on both thepartiesA panelof three names shall be submittedbythe Corporation and out of the said be appointed as Sole Arbitrator as selected byShri I t 1 1 Mittal The Panelofnames shall besubmittedlatest bythe 15 L October 1986 11 The Arbitrator atler upon theissue as involvedin the agreementwith regard to interest concludedthat the cause of action accrued to the claimant on 2591986 The reference was initiated on 03 2001 and decided on 3152002 The amount claimed in the petitionwas RsA662 Iacs as such the rate of interest as settled vide dated2591986 was 18Ioper annum therefore while Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 453 Civil Revision Noe 3156 of2008 8 0 CiviI Revision No 5412 of2008 m6 1 the intereston the principal amount it comes to Rs1 24287641 and awarded interest 120Ioper annum for the periodwhen the arbitration were pending1e 382001 to 313 2002 which comes to RsA138321e He also awardedfutureinterest on the principal amount 10Ioper annum till realization When the award was referredto the civil court for making it a rule of the court the while the priceof thesharesat m which it was to be sold to the claimant it also admiued the paymentof Q amount ofRsl lacs by the claimantsto the The 0 also admittedthe agreementsdated 92 1982 and 931982 and also the C 1 agreement dated21A1982 It was alsoadmittedthat as per C5 clausesix ofthe agreement dated21A1982 shareswere to betransferredif I theclaimantmakes the paymentin time otherwisethe claimant would pay interest 1950Ioon thedelayed paymentThe alsoavenedthat Z against the paymentalreadymade the shares had to be transfened on 231982 Anyway while leveling some on thepartof the claimant it was admittedby the that the earlier was cancelled on 30A1984 While aboutthelitigation 08 cJ0 betweentheparties it was also admittedthat the agreementdated258986 was enteredinto It was also stated by the that the matter in 3 regardto paymentof the principal amountlS still pending beforethe court which is the subject matter of the dispute in Thereforequestion Qm of awarding interest over this amount doesnotanse Thoughtherewasno clausein the agreementfor paymentof interest for the and referenceperiodyet the leamedArbitrator awarded the same atthe lee 18Ioper annum lt was also averredthat sincetherewas an injunctionregarding the transferof sharesto the claimant passedbythe Delhi HighCourt in November 1982 thereforethe shares could not be transferred As such the claimant is not entitledto any interest The objections were dulyrefuted by the ltl their replyand he addedthat the obiectiontoetitionwas time barred While theirclaim theypressed hardfor accepting the arbitration awardand making the same as rule ofthe court Duringthe pendencyof the before the Lower Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 454 1 Civil Revision Noe 3156 of2008 8t 0 Civil Revision Noe5412 of2008 7 Court OnkarMal Mittal died and now Varun Mittal and others wereimpleaded as his legalheirs From the of the partiesthe following lssues were framed 1 Whether the award dated 3132002 lS liable to be set asideas prayedfor20PP 2 Whetherthedelayin filingthe petitionis liable m to be condonedas prayedfor20PP r 3 Relief 0 Both the partiesled evidence vide order dated C43 31 3002 civili Judgewhile holdingthat the objectionpetitionwastlme C5 barreddecided issueNo against thepetitionerHowever it alsoreAlsedto set aside the award and orderedthe same to make it rule of the court The appeal preferredagainst the said order was partlyacceptedIt reversedthe Z findings returned bythe Civil Judge on issue Nol and condonedthe delay Ct lll filingthe objectionpetitionand modiOed the findingson issue No l while holdingthat the appellant was liable to pay onlya sum of I Rsl150 lacs as interest on the principal amount ofRsA3 lacs 08 CQ from 253 1982to 259 1986 However it declinedto grant pendente lite and futureinterestto the 7 Still disesatisfiedthe 6PSIDCIhas come up in revision so also the while Snding in thejudgment Om preferred a reVlSion petitionfor settingaside the order passedby the Appellate Courtand to restore theorderpassedbytheCivil court Now thebasic questions to be resolved betweenthe parties are pendente Iiteand 11 future interestand as to at whatrate iil whetherSection 5 ofthe Limitation Act could be appliedto condonethedelayin arbitration The Additional District Judge had set aside the findings with regardto delayin filingthe objectionpetitionWhile delving deepinto the argumentsraised by the rival partiesan opinioncould be formedthat the delaywhich occurred in tllingthe objectionpetition could not be condonedbyapplying The Limitation Act 1963 howevertheperiod for 61ingtheobjection could be extended Butthe presentcase is not for Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 455 0 Civil Revision Noe 3156of2008 8c 1Civil Revision No 5412 of2008 8 10 extenSI Oll of the periodfor ftlingthe objectionshowever the petitioners triedto makeout the case for condonationof delayIn the presentcase the awardwas passed on 313002 and it was Oledin the court on 662002 for makingthe same rule of thecourt Notice of the award was issuedto the and he was required to flle objectionpetition within 30 daysfrom the date of notice Ntice was received on 13 62002 therefore the petitioner was bound to file petitionby1372002 or at the bestby 1 1632002 6due to vacationsin the civil courts from 1562002 to 1530021 C but the petition was filed on 193002 As such the objection 0 petition was certainlybeyondlimitation The Appellate Court condonedthe C delayfor the reasons bestknown to it andthat too against obiter dictagiven C5 bythe ApexCourt in case Union of India vs Mls PopularConstruction I Coe 200ll RCCivill 124 0 AIR 2001SC 4010 wherein it was observed thatthe provisions of Section 50fthe LimitationAct were not applicable to Z the application theaward under Section34 ofthe Act therefore 2 r the petitionnot filed within the periodstipulated could not be entertained Even in the delivered by the ApexCourt ln case I National Aluminium CoeLtde vs Mls Presesteel Fabrications P9Ltde 08 2004 RCR illio 51SCid not make any observation QO 4 of Section 5 of theLimitationAct too The Coun had allowed 7 V2z the beneflt of Section 14 of theLilnitationAct The net result wouldbe that Section 14 of the Limitation Act does not givepowerto the court to condonethe delaybut onlypermitsextensionof limitation under the statute by givingthe benefit to the partybonalde the remedy in the COU Therefore in view of the authoritativepronouncement 1 of Supreme Coun in Union of India VSa Mls PopularConstructionCoe supral it would not be unsafeto hold that theAppellate Court fell in error while upsetting the findings returnedbythe trial court on issueNo Ie In order to decidethequestion of interest I againneedto make out the conclusions from the agreementas reached between the parties on 251986 i9The agreementwas entered into between the partieswith regardto paymentofamount even in the Iightofthe order of Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 456 Civil Revision Noe 3156 of2008 Si 0 4 Civil Revision Noe 5412 of2008 e9 injunctionpassedby the Delhi HighCourt in the monthof November 1982 iiIOnkarMal Mittal had paida sum of Rsl lacs to the beingthe priceof the shares of the company iioOut of this amount a sum of RsA8 Iacs was to be paidby the in monthly instalmentsofabout Rs790 lacs t each to the claiinantby 1987 with effectfroin the C datehereof againstretransfer by the claimantandlor his 0 nominee to the andlor its nomineeshare of the C company of the face value which have been C5 previously transferredbythe to theclaimant I 6ivIThebalanceamount of RsA3 lacs was to be paidby the to theclaimant in suitableinstalmentsofRs70 lacs each monthand the total paymentwasto be madeby C August1987 No interestwas payable in case ofno fault of paymentof instalment However interest 18Io was payable on the defaultedamount for the defaultedperiod 08 CQ vlThe partieshadalso agreedthat with regardto paymentof interest on RsA3 lacs for which shares could not be transferred by the to the 1 Or his associate matter be referredto the 0m arbitrator The admittedthat the sharecould not be transferred the wasln the of the order of injunctionpassedby the Delhi HighCourt passedin November 1982 againstthe transfer of shares Thus lll the light of that order the who could not withholdthe amount enteredinto an agreement for retum of the money therefore the questionto be raised by the is that theyare not liable to pay interest on the amount for the legaldisability which stood in their way against the transferofthe shares is ofno relevanceand appearsto be device constructedbythemto avoid their liabilityIt may furtherbe noticed that theagreement was enteredinto only Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 457 CiviI Revision No 3156 of2008 82 V 0 L Civil Revision Noe5412 of2008 W V after the order of injunction was passedjust to purchase peace by the and to resolve the disputeIt is also admittedthat RsA8 lacs wereretumedbythe which were paidto it for transferof shares with the operation of the order Though due to order 111 the Corporation could not transfer the sharesbut was not ltl any way debarredfromretuming the moneyto the and it hadno rightto with hold the money Thus it inust be held that Oll grantof 1 injunction and in view of the agreementdated 251 986 non return of CL money would amount to wrongly the money due in favourof 0 the and against the petitionerSincethe amount of RsA3 lacs C did not belongto the petitionertheycould not be construed to be the C5 propertyof the In any way the order of never I the to retum the money The has 1 the order passedby the Delhi HighCourt in its Z t to avoid the with regard to paymentofinterest As such the argumenthat the had bonaefldereason to withholdthe amount for which theyare alsonot entitledto pay interest doesnot weigh I with themind ofthis court and alsodoesnot soundto thefundamentallegal c41 principles of return of amount payable to the creditorswho have genuine cla The petitioner was boundto pay Rsl lacs howevertheparties had mutuallysettled the paymentof RsA8 lacs therefore the dispute with regardto lnterest over the amount was referredto Ll the arbitrator As such the is estopped to say that it was not bound to pay even RsA3 lacs for which the sharescould not be transferred The arbitratorwhile the matter on the basisofthe passeda detailed and elaborateaward grantingpreference pendente lite and ture lnterest It is also not in disputethat the came into beingfor promoting the industrial establishments and to advancethem loans on interest therefore it was a commercial establishmentestablishedunder a statute The Corporation itself has also beencharging interest 195Io from its debtors Even in the presentcase vide 30 1984the wasto be paidinterest at the rate of 195Io on the delayedpayment Similariyit had agreedvide Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document J 458 Civil Revision Noe 3156 of2008 82 0 Civil Revision Noe 5412 of 2008 11 9 dated25A1986 to retum theamount alongwith interest perannum for the defaultedperiodIt is also not lll dispute thatthe amount d ofRsA3 lacshas not so far beenpaidto the It is also well settled by now that the Arbitratoris the sole judgeof the qualityand quantity of the evidenceand it will not be for the court to open itself the task of beinga judgeon the evidencebeforethe Arbitrator Here not onlythe arbitratorpassed a well and well 1 reasonedaward but the objections as raisedbefore the civil court were 0 dismissed bya detailed on meritsas well as the issue of limitation 0 IS also settled Normallythe award givenbythe arbitratoris not to be C0 interfered with and the court cannot sit in appeal to the validity C5 ofthe awardbut the interferencein the awardbythe coun is to the X limitedextent when the arbitrator has exceededits jurisdictionor acted beyond and also beyond the scopeof the arbitration he has Z misconducted the or thereis any error apparent on the face of the record Here in this case the arbitratoris not an ordinary person butof the rank ofthe FIighCourt Judgealive ofthe real issues expert in thelegal field and thereis reasonablenessof the reasonsgivenby him for passing 08 such award thereforethe samelS not open to thescrutinybythecourtsas oo nothing is indicatedfrom the awardthat no person of ordinary a r would ever approve all the reasons assignedbyhim or his opinion1S 111 defiance of the logicthat theyshock the conscience of the court It was r also observed in case KV Mohammed Zakir VS RegionalSportsCentre 2009 Recent ApexJudge07AJI 304 SC whereinit was observedas under l 1 Lm 1 IVe have heard the learned counselfor thepartiesand we 1 have perusedthe award The award nlnS into considerable 1 detail as it is a awarcl While dealingwith thispart oftheclaim the arbitrator in No 1195 121and 5 0 31ofthe award had giventhe detailedreasons We are of the view that thesettledpositionoflaw is that the court should not substitute its own vlew over the view taken by the arbitratorwhile dealingwith theproceedings for settingaside the award It is equallywell settled thatwhere the arbitrator Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 459 Civil Revision Noe3156 of2008 84 Civil Revision Noe5412 of2008 e12 acts withinjurisdiction the reasonableness bjl the arbitrator lS not open to the scrutinyfor the However if the reasons are such as no person of ordinary prudencecan ever approve of them or if the reasons are so outrageousIn their cf7anceof logicthat theyshock the consclence of the court thenit is a differentsituation And ln an appropnatecase thecourt may interfereHowever degree ofsuchunreasonablenessmust begreaterthanthe standard in a certiorari 11 0 In the instant case the arbitrationaward was confirmed bythe C0 Lower Court In such a situation the AppellateCourt could not have C5 interferedwith the award on the OimsygroundsThe ApexCourt in the I similar situation in case UPe Federation Ltd vseMls Three Circles 20049 RCCiviO 546 obseed as under l Z 41 In any view of thematter theArbitratorhad considered 2 r theentire material on record and the rival submissionsof the Q partiesand then came to the conclusionoffact which was I accepted by the courts below it lS not open to this court to 06 00 interfere with such conclusions until and unlessit is malest e that such conclusions are perverse or arbitrary That apart e7 r we are oftheVlew that this wouldnot be a groundforsetting aside the award under theArbitration Act 1940 CL It was observedin case Mls Ravindra Kumar Gupta 6f Company vse Union ofIndia 2009 Recent ApexJudgment02AJ 646 asunder l he HighCourt while examiningobjections to the award under Section 30 of the Act 1940 cannot reppreciate the l evidenceled by thepartiesbeforearbitrator to substituteits own opinionwith that ofarbitratorWherearbitrator had duly scrutinized and evaluated the evidence and had given the award with elaborate reasons the same cannot be said to be perverse or based on no evidence to warrant by theHighCourt Gupta Suruchi 2012.12.20 15: 35 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:23 I attest to the accuracy and integrity of this document 460 Civil Revision Noe3156 of2008 Civil Revision Noe5412 of2008 13e 1 In the aforesaidcase theApexCourt had set asidethe order of a theHighCourtdisallowing theclaim awardedbythearbitrator The scope of interferencebytheAppellate Court is very limited in nature It was not required to the evidence but it has exceededhis while sitting over the evidenceand the same 111its own way Thoughthe AppellateCourt admitted that the failed to pay the amount of RsA3 lacs as per terms and 1 conditions of the settlementdated259 1986 However the has not made any such before the arbitratorabout the legal 0 disability which itnotto make thepaymentIt was also rightly 0 observedthat transferof shares was never agreed to betweenthepaniesbut Z C5 it was onlythepaymentof RsA3 lacs in instalmentswhich was agreedbut I the did not 8ilfill itspartofthe contract r4 Be that it may any with regardto paymentof RsA3 Z r lacs is on some differentpointbut the same