IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Arbitration Case No. 22 of 2009. Date of Decision:4th October,2010. _______________________________________________ H.P. State Forest Corporation Ltd. ….Petitioner. Versus. Rahul Sood and others. ….Respondents. Coram: Hon’ble Mr. Justice Dev Darshan Sud, J. Whether approved for reporting1?No. For the petitioner :Mr.Virbahadur Verma, Advocate. For Respondent 1 to 4. :Mr. Sunil Mohan Goel, Advocate. For respondent 5. :Mr.P.K.Sharma, Addl. Advocate General with Ms. Shubh Mahajan, Deputy Advocate General. ____________________________________________ Dev Darshan Sud,J(Oral) The Forest Corporation is the petitioner before this Court challenging the award made by Sh. A.C.Sharma, who was appointed as Arbitrator-cum- Director (North), HP. State Forest Corporation, North Zone Dharamshala, Kangra. The award has been challenged under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) on a number of grounds. Whether reporters of the Local papers are allowed to see the judgment? yes . 2 2. The basic challenge to the award is that the Arbitrator has misinterpreted the provisions of law and that undertaking filed by the respondent by way of an affidavit (Annexure: P2) has been ignored. The dispute related to the claim filed by the respondents herein, who had sold their forest produce in the Forest Corporation in the years 2001 and 2002. The learned Arbitrator, on consideration of the material before him, allowed the claim of the petitioner more especially when he considered the fact that the owners have been paid only 18% of the sale price and 82% is kept by the Corporation which by implication was advancing unjust enrichment. . 3. Number of submissions have been made in support of the claim and counter claim and urged by the parties. 4. It is undisputed before me that the forest trade is the monopoly of the State through the Himachal Pradesh Forest Corporation and regulated by the H.P. Forest Produce (Regulation of Trade) Act, 1982 and the Rules framed therein. The provisions of this Act were subject matter of consideration for a Division Bench of this Court in Ishwar Dutt and others Vs. State of H.P., 1997 (1) Sim.L.C. 480 considering the challenge made to the provisions of the Act, this Court ruled: “4 If the Committees are able to tender advice before 15th February, 1997 as regards the price to be fixed, the Government shall act under the main section 7. If on the other hand, the Committees are not in a position to tender such advice by 15th February, 1997, the State Government may proceed to fix the price without consultation of the 3 Committee on or before 15th April, 1997. But in all subsequent years, the State Government shall strictly follow the provisions in Section 7 and fix the price either in consultation with the Committee or without consultation of the Committee on or before 31st March every year. We make it clear that the constitution of the Committees as per the above direction and fixation of price by the Government can be only with respect to future years commencing from 1997- 98” (emphasis added) 5. The fact that a Committee, had, in fact, been constituted by the State by Notification No.Fts(A)3-3/06 dated 24th November, 1999, for the beat in which the forest produce of the petitioner was to be sold is admitted. The Divisional Forest Officer, Parvati Forest Division, Kullu, was the Chairman-cum-Convenor, representative of D.C.Kullu, Sh. Choba Ram, resident of village Tegu Benar, Post Office Shamshi, District Kullu, Sh. Bhagat Singh Negi, village Kol Behar, P.O. Mohar, District Kullu and the representative of the Managing Director of H.P. State Forest Corporation were nominated to be the Members. There is no materials/evidence on record to show whether this Committee has tendered its advice. 6. Adverting to the judgment in Ishwar Dutt’s case (supra), it was mandatory for the State Government in such a event to have fixed the price on or before 31st March every year whether with or without consultation. 7. Learned counsel appearing for the petitioner urges that the subsequent notification on the record of the case, namely Notification No. FFE-B-F(6)-2/2001 dated 4 29.5.2001 issued by the State of Himachal Pradesh on that date, itself constitutes compliance of the provisions of Section 7 of the Act. This submission cannot be accepted in view of the decision of the Division Bench. Reliance is also placed on one more decision by the learned counsel for the petitioner on the decision in CWP. No. 1045 of 2002 titled Devi Singh and others Vs. State of H. P. and another decided on 25.6.2003 to urge that the compliance under Section 7 of the Act was not required. 8. I have gone through the judgment and do not find that it supports the contention of the learned counsel for the petitioner. What the Court decided there was that the forest produce was purchased but the price has not been fixed under the second proviso to Section 7 of the Act. The Court holds: “The grievance of the petitioners is that they sold their forest produce to the respondent Corporation, agent of the State Government, but the price paid to them was not fixed in accordance with second proviso to Section 7 of the Act. It appears the respondent issued a notification on May 20, 1999 (Annexure:P1) fixing the price of forest produce under first proviso to Section 7 of the Act’ 9. After noticing the respective contentions urged on behalf of the parties, the Court proceeded to quash the notification Annexure P-1 dated 20th May, 1999 fixing price of the trees to the owners of the forest produce further directing that the price be fixed in terms of the second proviso to Section 7 of the Act. 5 10. In both these judgments the court has not dispensed with the requirement of following the mandatory provisions of Section 7 of the Act. 11. Section 34 of the Act enumerates the grounds on which an award can be challenged. This provision was interpreted by the Supreme Court in Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd., AIR 2003 S.C. 2629, holds: “31. Therefore, in our view, the phrase ‘public policy of India’ used in S.34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the fact of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term ‘public policy in Renusagar’s case (supra), it is required to be held that the award could be set aside if it is patently illegal. Result would be award could be set aside if it is contrary to:- (a) fundamental policy of Indian law; or (b) the interest of India; or (C) justice or morality, or (d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court. Such award is opposed to public policy and is required to be adjudged void.” (PP 2643 & 2644) 6 12. If these grounds are invoked, what I find from the award is that the submission made on behalf of the petitioner, if accepted would further doctrine of unjust enrichment as held by the Arbitrator. The seller is only being given a meager amount of the profit on sale. Learned counsel appearing for the respondents also urges that the State has been acting arbitrarily and fixes different rates for purchase of timber for the State as private individuals. I need not consider that aspect of the case. 13. A reading of Section 34 (Supra) shows that none of the other grounds etc. therein are attracted to the facts and circumstances of the case. It is also by now well settled that this Court will not sit as an appellate Court against the award made by an Arbitrator. {See: M/s Sumitomo Heavy Industries Limited Vs. Oil & Natural Gas Commission of India, 2010 (7) Scale 279}. 14. In the facts and circumstances of the case, I hold that no case for intervention has been made out. This petition is accordingly dismissed. There shall be no order as to costs. (Dev Darshan Sud), Judge. October 4, 2010(R)