1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION ARBITRATION APPEAL NO. 14 OF 2008 WITH CIVIL APPLICATION NO. 26 OF2008 The United India Insurance Co. ... Appellants. (Original Applicants) V/s. Parihar Foods Pvt. Ltd. ... Respondents. (Original Opponents) Mr. S.M. Vidyarthi for the Appellants. Mr. S.S. Kanetkar for the Respondents. CORAM : S.C. DHARMADHIKARI, J. DATED : 19TH JUNE, 2009. P.C. :- This is an Appeal under Section 37 of the Arbitration and Conciliation Act 1996. The Award of the Arbitrators made at Pune on 24th October 2005 was assailed by the Appellant before me by filing an application under Section 34 of the Arbitration and Conciliation Act, 1996. By the order under Appeal the learned District Judge - VIII, Pune has dismissed the Petition/Application being Civil Application bearing No.76 of 2006. Aggrieved by the Judgment and Order delivered on 16th November 2007 to this effect, the Original Respondent before the Arbitral Tribunal and the Applicant before the District Judge has filed this Appeal. 2. In support of this Appeal, Mr. Vidyarthi has raised two contentions. His first contention is that the Arbitral Tribunal has no jurisdiction to entertain and try or take cognizance of a 2 dispute arising out of one of the two policies which have been issued by the Insurance Company in favour of the Respondent before me. Thus, the submission on behalf of the Appellant - Insurer is that the Respondent had approached the Company for an insurance to cover the works/factories so also the other material there at and in that behalf two policies were issued. It was made clear to the Respondent that the Appellant had at no stage agreed to go for an arbitration with regard to any dispute arising out of Policy No.5872 and that they had agreed for reference of the dispute only pertaining to Policy No.5873. Once Police No.5872 was repudiated and which repudiation is undisputed then, the Arbitral Tribunal has no jurisdiction to entertain and try any dispute with regard to such a Policy. The Arbitral Tribunal was in clear error in passing an Award with regard to dispute under a repudiated policy. The learned District Judge also fell in error in not taking into consideration this vital aspect and therefore, his order is vitiated. A clear case of the Arbitral Tribunal considering a dispute which was not subject matter of Arbitration was thus made out and therefore, the Award should have been set aside. 3. The second contention of Mr. Vidyarthi is that the Award proceeds on the basis that the evidence led by both sides is not satisfactory and is insufficient. However, the Arbitral Tribunal indulged in guess work and concluded that 60% to 70% of the claim amount could be awarded with regard to the finished goods which are to be sold in the market and that ratio/percentage is also applied to the goods meant for 3 exports. Mr. Vidyarthi submits that once the Aribitral Tribunal had no material before it from which such a percentage could be deduced, then, there was no necessity of indulging in any guess work and the claim on that count should have been rejected outright and in its entirety. Therefore, assuming without admitting that both Policies could have formed subject matter of reference to the Arbitral Tribunal, yet, the error on the part of the Arbitral Tribunal in indulging in such a guess work would clearly mean that the Award is vitiated in the manner pointed out by the Appellant before the Arbitral Tribunal so also the learned District Judge. The Award is thus in conflict with public policy of India. 4. With the assistance of Mr. Vidyarthi and Mr. Kanetkar, I have perused the relevant part of the Award and the order of the learned District Judge. Since Mr. Vidyarthi urged that one of the policies was repudiated, I permitted him to refer to some material in that regard. However, from a reading of the Award and the Order under challenge so also hearing Mr. Vidyarthi at length, I am of the view that this is not a fit case for interference in my Appellate Jurisdiction. 5. Ultimately, the Appellate Jurisdiction under Section 37 of the Act, in so far as considering a challenge to the order refusing to set aside or setting aside an Award in an Application under Section 34 is not so wide as to permit the Court to travel beyond the scope of Section 34 itself. If the Award was assailed by recourse to Section 34, then, that 4 challenge must be considered in the light of the provisions that are pressed and more particularly Section 34 itself. Once it is not permissible to travel outside and beyond these provisions, then, in my limited jurisdiction, I cannot re- appreciate and re-appraise the materials which were placed before the Arbitral Tribunal. 6. That apart, the Arbitral Tribunal was in no error in holding that it had jurisdiction. The finding of the Arbitral Tribunal in that behalf is based upon the reading of the entire correspondence between parties. It is not as if the Arbitral Tribunal did not note that the contention of the Appellant canvassed right through out that it had repudiated the Policy No.5872. However, as has rightly been observed by the Tribunal, this was not the factual position. Merely because in one of the letters dated 13th September 2002, the original Claimant – Respondent before me has informed the Appellant’s – Divisional Manager that they are agreeable for going in an Arbitration in respect of the Policy No.5873 that does not mean that they had given up their contention or claims with regard to the other Policy bearing No.5872. Their case was that it is very much in force and not repudiated. That aspect becomes clear from the letter dated 13th September 2002, where the Claimants state that the other matters mentioned in their letter dated 2nd September 2002 remain the same. Thus, the series of letters and the entire correspondence must be seen and precisely that is done by the Arbitral Tribunal. That apart, it has adhered to the settled 5 principles while considering the plea of repudiation of the contract by the Insurer. It has also referred to the policy itself and the relevant terms and conditions. The conclusion of the Arbitral Tribunal that the Policy is not repudiated is based upon the entire factual data and material before it and I see no reason to take a different view. What the District Judge could not have done in his jurisdiction under Section 34 cannot be done by me in this limited jurisdiction. Ultimately, arbitration is a domestic tribunal and once the tribunal has in consonance with the principles of natural justice taken into account the cases of both sides and the disputed and undisputed position, the evidence before it, then, there is no reason to disturb the findings and the award. 7. The second contention of Mr. Vidyarthi also has no substance. It is very clearly observed by the Arbitral Tribunal that the surveyor’s evidence alone is not decisive. However, the insurer was agreeable to make a payment of Rs. 47,89,591/- and made the same. The dispute was with regard to the claim that was not admitted. That has been gone into and in paragraphs 7 and 8 of the Award and after considering the factual position, the Tribunal reasoned that the damage caused to the domestic stock has been estimated by the surveyor at Rs.45,55,000/-. However, he made a deduction which was not supportable. It is in that context that the Tribunal observed that the figure of Rs.44,55,000/- is around 69% to 70% of the claim in respect of loss of domestic stock. There is no guess work in this as is contended before me. 6 That is a finding arrived after referring to the survey report and entire material. 8. Similarly, in paragraph 23 of the Award, the claim towards loss of export stock to the extent of Rs.1,15,00,000/- and odd has been considered. Once again, that has been also dealt with in the back-drop of the survey report and finally from the calculations that were placed, the Tribunal observed that 69% to 70% ratio is the valid basis and out of a sum of Rs.1,15,00,000/- claimed, the tribunal awarded Rs.80,60,000/- and odd on this count. Once again, this is not a guess work. Merely because the ratio tallied with the finished goods’ claim does not mean that the Arbitral Tribunal awarded the sum only by resorting to guess work. 9. Once the fire is not disputed and that it was in existence for about 10 hours and there was a contract between the Appellants and Respondents but the dispute was only with regard to the actual loss suffered, then, the dispute having been resolved by the arbitration and the award having been unsuccessfully challenged before the District Judge, there is no reason to interfere with the same in my Appellate Jurisdiction. 10. These were the only contentions raised and argued before me. Having found no substance in them, I proceed to dismiss the Appeal. It is, accordingly, dismissed. 7 11. The amount of Rs.96,00,000/- and odd which is the remaining sum has been deposited in this Court. The Respondent – Claimants would be entitled to withdraw this sum with accrued interest. However, there would be no order as to costs. 12. Needless to state that as regards the balance sum of Rs. 47,00,000/- and odd amount which is deposited with the Bank is concerned, that is subject to the contract between the Respondents – Claimants and the Bank and if the Bank is entitled to appropriate it or adjust it in terms thereof, then, further needless to state that the said sum can be appropriated and adjusted by the Bank subject to the rights of the Claimants in law. If there is any balance sum due and payable under the Award in question, the Respondents – Claimants can always resort to execution and enforcement of the Award and dismissal of this Appeal and withdrawal of the amount deposited in the Court or appropriation by the Bank shall not preclude the Claimants from resorting to such of the provisions in law which enable them to execute and enforce the Award. The withdrawal and adjustments/appropriations are subject to the rights of the parties to this Appeal so also the Bankers, in law. 13. Civil Application No. 26 of 2008 will not survive once the Appeal is dismissed. Ad-interim stay, therefore, is vacated forthwith. S.C. DHARMADHIKARI, J.