HIGH COURT OF UTTARAKHAND AT NAINITAL (Court’s order whether the case is not approved for reporting) Description of the case A.O. No. 391 of 2007 Old No. 1260 of 1993 State of U.P. Through S.E. I. C. C. Dehradun Vs. M/s Phool Chand Satya Pal Approved for Reporting. Date of Decision:- 19.03.2008 Initial of Judge: ……………….. ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, …………………. HIGH COURT OF UTTARAKHAND AT NAINITAL A.O. NO. 391 OF 2007 Old No. 1260 of 1993 State of U.P., Through Superintending Engineer, Irrigation Construction Circle, Dehradun. …………Defendant/Appellant Versus M/s Phool Chand Satya Pal, 603, Santpura Road, Yamuna Nagar, Haryana. …………..Claimant/Respondent. Dated: 19.03.2008 Hon’ble Rajesh Tandon, J. Heard Smt. Beena Pandey, counsel for the appellant and Sri S.K. Jain, counsel for the respondent. This is an appeal filed by the defendant/ appellant. 2. By the present A.O. field under Section 39 of the Arbitration Act, appellant has prayed for setting aside the judgment and decree dated 21.9.1993 passed by the Civil Judge, Dehradun in O.S. No. 452 of 1993, whereby the application under Section 30/33 of the Arbitration Act filed by the appellant (Misc. Case No. 49 of 1993) has been rejected. 3. Briefly stated, an application was filed before the Arbitrator being suit No. 594 of 1989 M/s Phool Chand Vs. State of U.P. under Section 20 of the Arbitration Act praying to the following effect: “The claims are summarized below and it is prayed that Hon’ble Arbitration may award the same in favour of the claimants: (A)- Claims due to us on account of non-handing over of site of work by the respondent. Amount due …Res. 2,37,050.00 (B) Claims due to us on account of nature of excavated material being differen6t than that provided in the Agreement:- Amount due …Rs. 54,13,000.00 (c) Claims due to us on account of deletion of work of construction of Baksayan drainage crossing in its entirety. Amount due …Rs. 5,69,154.00 (D) Claims due to clearance of silt, debris, and boulders brought down by the flood caused due to action on the part of the respondent. Amount due …Rs. 1,04,027.00 (E) Claims due on account of spiltting of boulders above 600 mn in size. Amount due …Rs. 60,000.00 (F) Claims due on account of delay in the completion of work. Amount due …Rs. 23,10,000.00 (G) (i) Interest and all other pendentelite on the amounts from the day they have been withheld. (ii) Any other relief which the Hon’ble arbitration thinks fit. (iii) Cost of arbitration proceeding to be born by the respondent. The above statement of claims are submitted for the kind consideration of the Hon’ble Arbitration and an early award of the claims in favour of claimant.” 4. According to the plaint averment, on 1.11.1979 an agreement No. 2/S.E./79-80 took place for the excavation in Power Channel, Khara Project from Km. 6.300 to Km. 7.300 and construction of Drainage crossing at Baksayan Nala Km. 6.95. A dispute arose between the parties. Therefore, the dispute was sent to one Mr. Thakur Das Engineer – in-Chief (Arbitrator). In compliance of the Court’s order, the Arbitrator after hearing both the parties and taking into consideration the entire evidence, on 19.7.1993 passed an award and placed the same before the Court of Civil Judge, Dehradun. The award was passed to the following effect: “After considering the interpretation of the Clause 1.09 of the agreement I find that the Clause 1.09 does not apply to the facts of this case. However, I do not consider it a fit case to allow compound interest as claimed by the Claimants during arguments. The rate of 24% per annum is excessive as claimed by claimants. The claim of interest is allowed partially. I award interest @ 16% (sixteen percent) per annum with effect from 15.1.1984 to the date of award and @ 6% (six percent) per annum only from the date of award till payment or decree whichever is earlier. 2.50 Arbitration expenses incurred by both the parties will be borne by themselves. 4.00 Award After considering the written statement, documentary evidenced produced, pleading and arguments advanced by both the parties, I hereby make the following award to be paid by the Respondents to Claimants. 4.1 AMOUNT AWARDED AGAINST THE CLAIMS i) Claim No. 1 : Rs. 6462,500.00 ii) Claim No. 2 : Claim rejected, amount awarded Nil. iii) Claim No. 3 : Rs. 1,04,027.00 iv) Claim No. 4 : Claim rejected, amount awarded Nil Total amount awarded for claims 1 to 4 Rs. 65,66,527.00 I hereby award a total sum of Rs. 65,66,527.00 (Rupees Sixty Five lacs Sixty Thousand Five Hundred and Twenty Seven Only) INTEREST I award interest as follows: i) Interest @ 16% (sixteen percent) per annum from 15.1.84 to the date of award on Rs. 65,66,527.00 ii) Interest @ 6% (six percent) per annum from the date of award to the date of decree/or payment whichever is earlier on Rs. 65,66,527” 5. That case was further registered as Original Suit No. 452 of 1993. The defendant/appellant filed an objection under Section 30/33 of the Arbitration Act, which was registered as Misc. Case No. 49 of 1993 stating therein that the Arbitrator has illegally passed the award and has prayed for setting aside the same. 6. The claimant / respondent has filed a replication denying the contents of the objection raised by the defendant/appellant and has prayed for making the award as rule of the Court. 7. The Civil Judge, Dehradun after taking into consideration, the award passed by the Arbitrator and the objections raised by the defendant / appellant has passed the order to the following effect: “DysesUV dh vksj ls mifLFkr gksus okys ;ksX; vf/koDrk us esjs le{k ;g rdZ j[kk fd ;g okn 1983 ls yfEcr gS vkSj mls ckj ckj U;k;ky; dh 'kj.k ysuh iM+hA iap fu.kZ; dh xyr vk/kkjksa ij pqukSrh nh x;h gSA esjs le{k ekuuh; mPpre U;k;ky; dh ,d okn fof/k Jherh 'kkark 'khyk izfr /khjsUnz ukFk lsu ,0vkbZ0vkj0 1963 mPpre U;k;ky; ist & 1677 izLrqr dh x;hA ekuuh; mPpre U;k;ky; dh bl okn fof/k ds fl}kUrksa dks ns[kus ls ;g Li"V gksrk gS fd U;k;ky; dks iap fu.kZ; dks iq"V djus esa lgk;rk nsuh pkfg;s u fd e/;LFk us lHkh fcUnqvksa ij fopkj dj viuk fu.kZ; fn;k gSA ekuuh; mPpre U;k;ky; us fl)kUrksa dks ns[kus ls o e/;LFk }kjk fn;s x;s iap fu.kZ; dks ns[kus ls ,slh dksbZ =qfV iap fu.kZ; es utj ugha vkrh ftls fd mls mipkj dh Js.kh esa j[kk tk ldsA Ek/;LFk }kjk DysesUV dks C;kt fnyk;s tkus ij Hkh foHkkx }kjk vkifRRk izLrqr dh x;h gS vkSj dgk x;k gS fd vuqca/k dh /kkjk 1-09 ds jgrs gq, C;kt fnykuk e/;LFk ds {ks=kf/kdkj ls cka/kk FkkA foi{kh }kjk e/;LFkrk vf/kfu;e dh vuqlwfpr&1 dh /kkjk 7 , ds vUrxZr C;kt nsus dk vf/kdkjh e/;LFk dks crk;k x;kA esjs le{k oknh }kjk ekuuh; mPpre U;k;ky; dh ,d ,d okn fof/k lafpr flapkbZ foHkkx mM+hlk ljdkj izfr th0lh0 jk; ,0vkbZ0vkj 1992 mPpre U;k;ky; ist 732 rFkk 1993 ¼1½ vkjfcVsª’ku yk fjiksVZj ist &454 izLrqr dh x;hA bl okn okn fof/k;ksa dks n[kus rFkk mijksDr /kkjk 7, dks ns[kus ls ;g fuf’pr gksrk gS fd e/;LFk dks C;kt fnykus dk iwjk vf/kdkj izkIr gS tgka rd /kkjk 1- 09 dk iz’u gS mls e/;LFk u iap fu.kZ; dk Hkkx ugha cuk;k vr% ;g U;k;ky; mldh foospuk ugha dj ldrkA vU;Fkk Hkh /kkjk 1-09 ij e/;LFk us bl rjg dk fu.kZ; fn;k gS fd ;g /kkjk rHkh ykxw gksrh gS tc foHkkx fdlh /ku dks fdlh fookn vFkok Hkze dh fLFkfr esa vius ikl j[ks ;k mls nsus esa nsjh gks x;h gksA ,slh fLFkr esa foHkkx gtkZ o C;kt nsus dk mRrjnk;h ugha gks ldrk gSA ;ksX; e/;LFk us vius vfHkfu.kZ; esa dgk gS fd ia[k fu.kkZ;d }kjk r; dh x;h jkf”k ds laca/k esa ;g ugha dgk tk ldrk gS fd oknh us fdlh Hkqxrku dks Hkze dh fLFkfr esa jksd j[kk FkkA okLro esa foi{kh }kjk vuqca/k dh vof/k chrus ds yxHkx 2 o"kZ rd dk;Z djk;k x;k vr% /kkjk 1-09 ds izkfo/kku blesa ykxw ugha gksrs gSA esjs le{k DysesUV }kjk ekuuh; mPpre U;k;ky; dh ,d okn fof/k gSnjkckn E;wfufliy dUlVªD’ku dEiuh izfr ,e0 d`".kkLokeh ,0vkbZ0vkj0 1985 mPpre U;k;ky; ist 607 izLrqr dh x;hA mijksDRk okn fof/k o mijksDr fo’ys"k.k ls ;g Li"V gS fd e/;LFk dks C;kt fnykus dk iwjk {ks=kf/kdkj gS vkSj mUgksus C;kt fnykdj dksbZ vipkj ugha fd;k gSA mijksDr fu"d"kksZ ds vk/kkj ij eSa bl er dk gwW fd foHkkx }kjk izLrqr dh x;h vkifRr;ksa vUrxZr /kkjk 30@33 Lohdkj gksus ;ksX; ugha gS vkSj fujLr gksus ;ksX; gSA e/;LFk }kjk fn;k x;k iap fu.kZ; U;k;ky; dk fu;e cuk;s tkus ;ksX; gSA vkns”k izdh.kZ okn la0 49@93 esa nh x;h vkifRr;ka vUrxZr /kkjk 30@33 e/;LFkrk vf/kfu;e [kafMr dh tkrh gSA okn la0 452@93 esa fd;k x;k iapfu.kZ; lO;; Lohdkj tkrk gS vkSj mls U;k;k;y dk fu;e cuk;k tkrk gSA fMØh dh lUrqf"V rd DysesUV 16 izfr”kr okf"kZd C;kt Hkh ikus dk vf/kdkjh gksxkA” 8. As will appear from the aforesaid, the Civil Judge has confirmed the award passed by the Arbitrator and has set aside the application filed by the defendant / appellant under Section 30/33 of the Arbitration Act and has decreed the suit along with interest @ 16 percent per annum. 9. I do not find any illegality or infirmity in the aforesaid award as the Civil Judge has taken into consideration every evidence available on record and thereafter has confirmed the award passed by the Arbitrator, therefore, the same deserves to be confirmed. 10. The scope of interference under section 30 & 33 of the Arbitration Act has been interfered from time to time by the Apex Court by observing that the Civil Court cannot sit over and above the arbitration award like a regular appeal. 11. In Rajasthan State Road Transport Corporation Vs. Indag Rubber Ltd. (2006) 7 SCC 700, it has been observed as under: “6. Learned counsel for the appellant strenuously urged before us that the learned Single Judge has upset the finding of fact recorded by the arbitrator and has examined the matter like an Appellate Authority which is not open to the learned the arbitrator after recording necessary evidence and after examining the whole material on record, came to the finding that the claim of the Corporation deserves to be accepted partially. But the learned Single Judge sitting as a court of appeal has upset the finding of fact recorded by the arbitrator. Learned counsel for the appellant in support of his submission invited our attention to a decision of this Court in B.V. Radha Krishan v. Sponge Iron India Ltd. (1997) 4 SCC and submitted that it is not open to the learned Single Judge to sit as a court of appeal while disposing of the award of the arbitrator, which was made the rule of the court. In the above decision, it was observed as under: (SCC p. 700, para 13) “13. Bearing in mind the principles laid down by this Court in the abovesaid cases, if we look into disposal of the matter by the High Court, it would be evident that the High Court has substituted its own view in place of the arbitrator’s view as if it was dealing with an appeal. That is exactly what is forbidden by the decision of this Court. Therefore, we have no hesitation to set aside the judgment of the High Court on this issue.” 7. In this connection, learned counsel for the appellant invited our attention to a decision of this Court in State of Rajasthan v. Puri Construction Co. Ltd. (1994) 6 SCC 485, wherein it was observed as under: (SCC pp. 485-86) “However, in the anxiety to render justice to the party to arbitration the court should not reappraise the evidence intrinsically with a close scrutiny for finding out that the conclusion drawn from some facts, by the arbitrator is, according to the understanding of the court, erroneous. Such exercise of power which can be exercised by an appellate Corut with power to reverse the finding of fact, is alien to the scope of ambit of challenge of an award under the Arbitration Act. If a question of law is referred to arbitration and the arbitrator comes to a conclusion, it is not open to challenge the award on the ground that an alternative view of law is possible. Even if it is assumed that on the materials on record, a different view could have been taken and the arbitrators have failed to consider the documents and materials on record in their proper perspective, the award is not liable to be struck down in view of judicial decisions referred to hereinbefore. Error apparent on the face of the record does not mean that closer security of the import of documents and materials on record, finding made by the arbitrator may be held to be erroneous. An error of law or fact committed by an arbitrator itself does not constitute misconduct warranting interference with the award.” 12. In B.V. Radha Krishna Vs. Sponge Iron India Ltd. AIR 1997 SC 1324, the Apex Court has observed as under: “11. The disposal of the matter by the high Court in the manner shown above does not come within the ambit of Section 30 of the Arbitration Act. This Court time and again, has pointed out that the scope and ambit of Section 30 of the Act. In State of Rajasthan v. Puri Construction Co. Ltd., (1994) 6 SCC 485 : (1994 AIR SCW 5061), after referring to decisions of this Court as well as English cases, the Court observed as follows (para 11 of AIR):-- On the scope and ambit of the power of interference by the Court with an award made by various decisions have been made from time to time by law Courts of India including this Court and also by the Privy Council and the English Court. Both the parties have referred to such decisions in support of their respective contentions. The factual contentions of the respective parties are proposed to be scrutinized and then the facts are proposed to be tested within the conspectus of judicial decisions governing the issue involved.” 12. This Court again observed in para 26-28 (of SCC) : (Para 25-27 of AIR) as follows:- “The Arbitrator is the final arbiter for the dispute between the parties and it is not open to challenge the award on the ground that the Arbitrator has drawn his own conclusion or has failed to appreciate the facts. In Sudarsan Trading Co. v. Government of Kerala, (AIR 1989 SC 890), 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 to 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 of the jurisdiction. Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the Arbitrator had acted contrary to the bargain between the parties (Emphasis supplied). Whether a particular amount was liable 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 burden of saying that this was contrary to the contract and as such beyond jurisdiction. If on a view taken of a amount 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 makng the award the Court cannot examine the reasonableness of the reasons. If the parties have selected their own forum, the deciding forum must 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 a Judge on the evidence before the Arbitrator. 13. In Municipal Corporation of India v. Jagan Nath Ashok Kumar (AIR 1987 SC 2316), it has been held by the Apex Court that appraisement of evidence by the Arbitrator is ordinarily never a matter which the Court questions and considers. It may be possible that on the same evidence the Court may arrive at a different conclusion than the one arrived at by the Arbitrator but that by itself is not ground for setting aside the award. It has also been held in the said decision that it is difficult to give and exact definition of the word ‘reasonable’. Reasons varies in its conclusions according to the idiosyncrasies of the individual and the time and circumstances in which he thinks. In cases not covered by authority the verdict of jury or the decision of a Judge sitting as a jury usually determines what is ‘reasonable’ in each meaning of reasonable in regard to those circumstances of which the actor, called on to act reasonably known or ought to know. An arbitrator acting as a Judge has to exercise a discretion informed by tradition, methodized by analogy, disciplined by a system and subordinated to the primordial necessity of order in the social life. Therefore, whose reasons genuine and relevant for the Arbitrator to hold the manner he did, have been indicated, it cannot be said that the reasons are unreasonable. 14. In Hindustan Construction Co. Ltd. v. Governor of Orissa (1995) 3 SCC 8: (1995 AIR SCW 1575), this Court observed on the scope of interference by the Court as follows (at p. 1582 of AIR):- “It is well known that the Court whileconsidering the question whether the award should be set aside, does not examine the question as an appellate Court. While exercising the said power, the Court cannot reappreciate all the materials on the record for the purpose of recording a finding whether in the facts and circumstances of a particular case the award in question could have been made. Such award can be set aside on any of the ground specified in Section 30 of the Act. 15. Relying upon State of Rajasthan v. Puri Construction Co. Ltd. (1994) 6 SCC 485 in Rajasthan State Road Transport Corpn. Vs. Indag Rubber Ltd. (2006) 7 SCC 700, the Apex Court has held as under: “However, in the anxiety to render justice to the party to arbitration, the court should not reappraise the evidence intrinsically with a close scrutiny for finding out that the conclusion drawn from some facts, by the arbitrator is, according to the understanding of the court, erroneous. Such exercise of power which can be exercised by an appellate court with power to reverse the fining of fact, is alien to the scope and ambit of challenge of an award under the Arbitration Act. If a question of law is referred to arbitrator and the arbitrator comes to a conclusion, it is not open to challenge the award on the ground that an alternative view of law is possible. Even if it is assumed that on the materials on record, a different view could have been taken and the arbitrators have failed to consider the documents and materials on record in their proper perspective, the award is not liable to be struck down in view of judicial decisions referred to hereinbefore. Error apparent on the face of the record does not mean that on closer scrutiny of the import of documents and materials on record, the finding made by the arbitrator may be held to be erroneous. An error of law or fact committed by an arbitrator by itself does not constitute misconduct warranting interference with the award.” 16. In Coimbatore District Podu Thozillar Samgam Vs. Bala Subramania Foudry and others reporting in A.I.R. 1987 Supreme Court 2045, it has been held as under: “An award can only be set aside where there is an error on its face. Further, it is an error of law and not mistake of fact committed by the arbitrator which is justiciable in the application before the court. It is an error of law and not mistake of fact committed by the arbitrator which is amenable to corrections by the Court. Where the alleged mistakes or alleged errors, if there by any of which grievances were made were mistakes of fact if at all, and did not amount to error apparent on the face of the record, the objections were not sustainable and award could not be set aside.” 17. In Puri Constructions Pvt. Ltd. Vs. Union of India reported in AIR 189 Supreme Court 777 and in the case of Food Corporation of India Vs. Joginderpal Mohinderpal and another page 1263 has held that – “It is not necessary for a court a examine the merits of the award with reference to the materials produced before the arbitrator. The Court cannot sit in appeal over the views of the arbitrator by re- examining and reassessing the materials.” 18. In view of the above, we find no merit to interfere with the interest part awarded by the Arbitrator, which has been made rule of the court by the Civil Court. 19. In view of the above, the jurisdiction under Section 39 of the Arbitration Act being limited and we cannot enter into the findings of fact arrived at by the Arbitrator confirmed by the Civil Court. 20. The appeal lacks merit and is dismissed. No order as to costs. Dated- 19.03.2008 (Rajesh Tandon, j.) Rathour