C.R. No. 4279 of 2002 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.R. No. 4279 of 2002 Date of Decision: 11.08.2009 The Ajnala Cooperative Sugar Mills Ltd., Ajnala, Distt. Amritsar, through its Managing Director. ... Revision-Petitioner Versus 1. M/s Sumac International Limited, A-61, Talkatora Estate, Lucknow. 2. Shri J.N. Vashist, Arbitrator (Additional Registrar, Cooperative Societies Ltd.), H. No. 1264, Sector 44-B, Chandigarh. ...Respondents CORAM: HON'BLE MR. JUSTICE SHAM SUNDER Present: Mr. Rahul Sharma, Advocate, for the revision-petitioner. Respondents ex-parte. SHAM SUNDER, J. * * * * This revision-petition under Article 227 of the Constitution of India, is directed, against the order dated 06.12.95, rendered by the Court of Senior Sub Judge, Chandigarh, vide which, the award dated 13.11.92 exhibit O2, was made rule of the Court, and the order dated 30.03.02, rendered by the Court of Additional District Judge, Chandigarh, vide which, it dismissed the appeal. C.R. No. 4279 of 2002 2 2. Shorn of unnecessary details, the facts relevant for the decision of this petition, are that, M/s Suman International Limited, respondent and M/s Ajnala Cooperative Sugar Mills Limited, the appellant/objector, entered into an agreement on 04.10.88, to design, manufacture, procure, supply and erect the sugar plant at village Bhalla Pind, Tehsil Ajnala, District Amritsar. During the execution of work, certain disputes, arose between them and, on an application made by the respondent, the dispute was referred for arbitration to Sh. J.N. Vashist, Additional Registrar, Cooperative Societies (Retired), who adjudicated upon the matter, and pronounced the award dated 13.11.92. 3. The proceeding before the Court commenced, on filing of the award by the Arbitrator, in the Court, on 04.02.93. Notice of the award was given to both the parties. The objector appeared and filed an objection petition, alleging therein, that the Arbitrator had committed misconduct, and serious error of law, which was apparent, on the face of the award, and, therefore, the same was liable to be set aside and a fresh Arbitrator, should be appointed. 4. The respondent filed reply controverting the objections, raised by the objector, and prayed that the award be made rule of the Court. 5. On the pleadings of the parties, the following issues were struck:- (i) Whether the award is liable to be set aside on the grounds alleged by respondent No. 2 M/s Ajnala Cooperative Sugar Mills Ltd., Ajnala? OPR-2 (ii) Whether the award is liable to be set aside partially as alleged by respondent No. 1? If so, its effect? OPR-1 (iii) Whether the objections filed by respondent C.R. No. 4279 of 2002 3 No. 2 are within time? If not, its effect? OPR-2 (iv) Whether respondent No. 2 is estopped from challenging the award as alleged? OPR-1 (v) Relief. 6. Respondent No. 1 was duly served, but none appeared, on its behalf, as a result whereof, it was proceeded against exparte. 7. After going through the exparte evidence, and hearing the Counsel for the objector, award exhibit O2, was made rule of the Court, by the trial Court. 8. Feeling aggrieved, an appeal, was preferred by the appellant/objector, which was dismissed, by the Court of Additional District Judge, Chandigarh, vide order dated 30.03.02. 9. Feeling dissatisfied, the instant revision-petition, has been filed by the revision-petitioner. 10. I have heard the Counsel for the revision-petitioner, and have gone through the evidence and record of the case, carefully. 11. The Counsel for the revision-petitioner, submitted that the Courts below, fell into a grave error, by not noticing the fact, that the claim entered by the Arbitrator was even without jurisdiction, in as much as, there was no provision, in the agreement, for price escalation, whereas, the case of the respondent was based on the escalation of price. He further submitted that the Courts below, also fell into an error of law, in as much as, the Arbitrator had recorded a clear finding, that the claimant/respondent was not entitled to any amount, but, at the same time, awarded the amount of escalation of price, in its favour. He further submitted that the award C.R. No. 4279 of 2002 4 suffered from an error of law, on the face of record, in as much as, the Arbitrator, recorded contradictory findings therein, as at one place, it was held by him that there was no agreement between the parties regarding the escalation of price of the boilers, but at the same time, taking a sympathetic view, that there was extremism in the State of Punjab, awarded a lump sum amount for escalation. He further submitted that the Courts below, were wrong, in coming to the conclusion, that they could not go into the merits of the award, even if, the conclusion arrived at, by the Arbitrator, was inconsistent with his own findings or the material documents, had been ignored by him. He further submitted that, as such, the objection-petition was liable to be accepted and the award, could not be made rule of the Court. He further submitted that the orders of the Courts below, being illegal, were liable to be set aside. 12. After giving my thoughtful consideration, to the contentions, raised by the Counsel for the revision-petitioner, in my considered opinion, the revision-petition, deserves to be accepted, for the reasons to be recorded, hereinafter. It is evident from the award exhibit O2, that at one place, the Arbitrator had observed that the argument of respondent No. 1, that the supply of two boilers meant supply of extra items, was not correct. Even the Arbitrator in the award, in so many words, observed that the claim of respondent No. 1, under clause 2.4 of the agreement, for extra-cost for extra-work, appeared to be flimsy, as the provision for installing two boilers, already stood incorporated, in the agreement. Once the Arbitrator recorded, in the award, that respondent No. 1, was not entitled to the escalation in price for setting up two boilers, as the same stood already included in the agreement, he could not grant the amount of Rs. 15.83 lacs, C.R. No. 4279 of 2002 5 on the ground that respondent No. 1, had to work under trying conditions in Punjab, which called for sympathetic consideration, for the services rendered for installing the plant, which would be an asset for the Ajnala Cooperative Sugar Mills, in the long run. The Arbitrator, used word 'benefit of doubt”, while allowing the claim of Rs.15.83 lacs. Such contradictory conclusion arrived at, by the Arbitrator, in the award, referred to above, could constitute the legal mis-conduct on his part. In K.P. Poulose Vs. State of Kerala and another, AIR 1975 (SC), 1259, the principle of law, laid down, was that mis-conduct, under Section 30(a) has not a connotation of moral lapse. It comprises legal mis-conduct, which is complete, if the Arbitrator, on the face of the award, arrives at an inconsistent conclusion, even on his own finding, or arrives at a decision, by ignoring the very material documents, which throw abundant light on the controversy to help a just and fair decision. Similar principle of law, was laid down, in Oil & Natural Gas Commission Now Called Oil and Natural Gas Corporation Limited Vs. Mc Dermott International Inc., 1999(2), Arb. LR 417 (Bombay). The Courts below, were, thus, wrong in coming to the conclusion, that they could not go into the process of reasoning, recorded by the Arbitrator, while awarding the amount, in question, in favour of respondent No. 1, even if, his findings were contradictory and against the provisions of the agreement. In my considered opinion, the Courts below, were, within their jurisdiction to go into the contradictory findings, recorded by the Arbitrator, in the award, referred to above, and could come to the conclusion, as to whether, the same constituted legal mis-conduct, and, as such, the objection-petition, was liable to be accepted. The Courts below, in my considered opinion, acted arbitrarily. The orders of the Courts below, C.R. No. 4279 of 2002 6 suffer from illegality, material irregularity and perversity, warranting the interference of this Court, in its revisional jurisdiction, under Article 227 of the Constitution of India. 13. For the reasons recorded above, the revision-petition, is accepted. The order dated 06.12.95, rendered by the Court of Senior Sub Judge, Chandigarh, and the order dated 30.03.02, rendered by the Court of Additional District Judge, Chandigarh, dismissing the appeal, are set aside. Consequently, the objection petition, filed by the revision-petitioner, against the award of amount of Rs. 15.83 lacs, in favour of respondent No. 1, stands accepted. If there remains any dispute, between the petitioner and respondent No. 1, falling within the purview of the arbitration agreement, the same may be referred to the arbitrator, in accordance with law. 11.08.2009 (SHAM SUNDER) Amodh JUDGE