IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 19-1-2010 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALILNGAM AND THE HONOURABLE MR.JUSTICE T.RAJA OSA No.10 of 2010 and MP No.1 of 2010 M/s.Crompton Greaves Ltd., Registered Office at 'CG House' Dr.Annie Besant Road Praghadevi Mumbai 400 025, Engineering & Projects Division 232, NSC Bose Road Chennai 600 001 represented by its Principal Officer/General Manager S.Mehta .. Appellant vs 1.D.T.M.Construction (India) Ltd., 59/B, Chowrangee Road Calcutta 700 020. 2.Dr.Haragopal Sepuri 3.K.V.Kuppuswamy 4.C.H.Gopinatha Rao .. Respondents Original side appeal preferred under Order XXXVI Rule 11 of O.S. Rules read with Clause 15 of Letters Patent ad Sec.37 of the Arbitration and Conciliation Act 1996 against the order of this Court made in O.P.No.280 of 2005 dated 28.7.2009. For Appellant : Mr.Nageswaran For Respondents : Mrs.Dola Bash for Mr.N.Thiagarajan for R1 JUDGMENT (Judgment of the Court was delivered by M.CHOCKALILNGAM, J.) This intracourt appeal challenges an order of dismissal of O.P.No.280 of 2005 seeking to set aside an arbitral award dated 28.7.2003, by the arbitral tribunal consisting of the respondents 2 to 4. https://hcservices.ecourts.gov.in/hcservices/ 2.Admittedly, pursuant to a contract for construction of a new International Terminal Building at Calicut Airport in Kerala from the National Airport Authority of India (NAAI) secured by the appellant/petitioner, the same work was awarded to the first respondent under a letter of indent dated 18.9.1993. The value of the work was fixed at Rs.3,00,51,583/-, and the date of commencement of the work was fixed as 17.9.1993 and the completion on 5.2.1995. In view of the dispute that arose between the parties, the first respondent nominated the second respondent as their arbitrator, and the appellant nominated the third respondent as their arbitrator. The respondents 2 and 3 nominated the fourth respondent as the Presiding Officer. All of them constituted the Arbitral Tribunal. Before the Arbitral Tribunal, the first respondent made extensive claims on various heads. The appellant also filed a counter claim. The tribunal made an award directing the appellant to pay the first respondent a sum of Rs.14,89,655/- with interest at the rate of 12% per annum from 3.3.99 to 21.2.2003 and thereafter at the rate of 9% per annum on the said amount of Rs.14,89,655/- till the date of payment. Challenging that award, the appellant filed the instant OP. 3.On enquiry, the learned Single Judge took the view that the OP was devoid of merits and hence dismissed the same. Thus this appeal at the instance of the appellant. 4.Advancing arguments on behalf of the appellant, the learned Counsel would submit that the appellant did not question the jurisdiction of the Arbitral Tribunal but only questioned the exercise of their jurisdiction; that originally, there was a dispute referred to the Tribunal as regards the entitlement of the first respondent herein for payment from the appellant herein, and the Tribunal clearly gave a finding on that reference; that the clear finding of the Tribunal is that the first respondent herein cannot have any payment in excess of that which is paid or payable as per the award of the sole arbitrator by the NAAII to the appellant; that while so, the Tribunal strayed beyond the scope of the reference and adjudicated the claims of the first respondent; that nothing prevented the Tribunal from directing the appellant to file the award of the sole arbitrator in respect of the dispute between the appellant and the NAAI; that the observation of the Tribunal was to the effect that the appellant undertook to pass on the benefit, if any, in their favour passed by the sole arbitrator, less their margin as agreed; that apart from that, the award itself is beyond the scope of the contract; and that in the claim petition, the first respondent has clearly admitted that all terms and conditions which were specified in the work order of NAAI given to the appellant were in turn given to the first respondent under work order dated 18.9.1993. 5.Added further the learned Counsel that it is pertinent to note that the claim is not based on the terms of the contract but on law of contract; that the Tribunal has not considered that the contract between the appellant and NAAI and the contract between https://hcservices.ecourts.gov.in/hcservices/ the appellant and the first respondent herein are back to back; that the first respondent is estopped from pleading compensation over and above the price variation agreed to and paid; that the Arbitral Tribunal awarded Rs.10,01,724/- based on a formula which is neither pleaded nor proved by the first respondent; that the Tribunal cannot undertake to provide or substitute what is not pleaded or proved; that the award itself is against the contract; that there is no contract to pay liquidated or unliquidated damages in case of delay; that as per Sec.25 of the Act, there must be evidence for every claim; that without evidence or adducing proper evidence, there cannot be an award; and that under the circumstances, the order of the learned Single Judge has got to be set aside and the award be set aside. 6.The learned Counsel for the first respondent in his sincere attempt of sustaining the order under challenge has put forth the very same contentions which were raised before the learned Single Judge. 7.This Court paid its anxious consideration on the submissions made. 8.The case of the appellant/petitioner before the learned Single Judge and equally before the Bench is that the contract which was awarded to the first respondent was actually one procured from NAAI by the appellant; that the same was awarded to the first respondent as a whole on the same terms and conditions; that the claim lodged by the appellant with the NAAI was referred to arbitration as provided under the original contract between the appellant/petitioner and NAAI; that the same was well within the knowledge of the first respondent, and thus the result of the arbitral proceedings between the appellant and NAAI has got a direct bearing on the dispute between the appellant and the first respondent; that since the matter was brought to the notice of the Arbitral Tribunal, it should not have proceeded with the arbitration, and hence the conclusion of the Tribunal was erroneous and one without jurisdiction. It is also urged by the appellant's side that in the arbitral proceedings between the appellant and NAAI, the NAAI was held liable to pay only a sum of Rs.7,22,714/- and out of the said award amount, 90% alone could be paid by the appellant to the first respondent as agreed between them and thus the Arbitral Tribunal has acted beyond the scope of the submissions. It was also further added that on the claims made, the Arbitral Tribunal did not consider all the materials placed; and that though it was brought to the notice of the learned Single Judge, the attention was not adverted to those contentions; but the petition has been dismissed. 9.After looking into all the materials available and considering the submissions made by the respective counsel, this Court is of the considered opinion that the order of the learned Single Judge has to be affirmed by the Court. It is true that pursuant to the contract awarded in favour of the appellant, the contract in question was awarded to the first respondent. It is https://hcservices.ecourts.gov.in/hcservices/ also an admitted position that the same terms and conditions found in the contract between the appellant and the NAAI are found in the contract in question. The contract entered into between NAAI and the appellant and the contract entered into between the appellant and the first respondent were separate contracts. Merely because the terms and conditions found in those two contracts are found to be same or identical, it cannot be stated that both the contracts are the same. It is pertinent to note that the first respondent was only a sub-contractor of the appellant, and no approval was obtained from NAAI. That apart, delays were also caused by the appellant. The Tribunal has also recorded that the first respondent was keeping the establishment, plant and machinery till 31.1.1996, and it was the appellant who sought extension of time from NAAI for which the first respondent could not be held responsible and hence they are entitled for compensation. 10.As could be seen from the award of the Arbitral Tribunal, a specific issue was raised, and it was found that the claim of the appellant against NAAI before the sole arbitrator is exactly the claim made by the first respondent against the appellant. Urging it as a ground, it was contended that the Tribunal ought not to have arbitrated the matter. From the available materials, it could be seen and it is also an indisputable fact that an award came to be passed in the arbitral proceedings between the NAAI and the appellant on 27.8.2002. In the instant case, though the appellant questioned the arbitrability and the jurisdiction of the Tribunal despite the fact of an award being passed on 27.8.2002 he has not whispered anything before the Arbitral Tribunal. Admittedly, the arguments of the first respondent was concluded on 14.11.2002. Pending the counter arguments, the last sitting was held on 21.2.2003. An award came to be passed on 22.3.2003. It is pertinent to point out that the appellant filed an application under Sec.33 of the Arbitration and Conciliation Act, 1996, on 9.5.2003 for rectification of some defects. When there was a claim made by the first respondent, the appellant has not only filed his objections to the claim, but has also participated in the entire arbitral proceedings and has never questioned the jurisdiction of the Tribunal, but was a party to the same. After the award came to be passed, the appellant came forward with an application stating that the award which came to be passed on 27.8.2002 between the appellant and the NAAI, should be taken into consideration, and the appellant has also called that it would require rectification of some defects in the award passed on 22.3.2003. Having failed to disclose the award made on 27.8.2002 and having participated in the arbitral proceedings in entirety, at no stretch of imagination, the appellant could be allowed to file an application calling it as one for rectification of some defects as stated above. 11.The learned Counsel for the first respondent relied on a decision of the Apex Court reported in 2006 (5) SUPREME 662 in support of their contention. It would be more apt and appropriate to reproduce the relevant portion of the said decision as follows: "49.After the 1996 Act came into force, under Section 16 of the Act, the party questioning the jurisdiction of the https://hcservices.ecourts.gov.in/hcservices/ arbitrator has an obligation to raise the said question before the arbitrator. Such a question of jurisdiction could be raised if it is beyond the scope of his authority. It was required to be raised during arbitration proceedings or soon after initiation thereof. The jurisdictional question is required to be determined as a preliminary ground. A decision taken thereupon by the Arbitrator would be subject matter of challenge under Section 34 of the Act. In the event, the arbitrator opined that he had no jurisdiction in relation thereto an appeal there against was provided for under Section 37 of the Act. 50.The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it." 12.In view of the above facts and circumstances and also the above decision, the learned Single Judge was quite correct in rejecting the contention that the Arbitral Tribunal lacked jurisdiction and the claim could not be arbitrated. 13.The other contention that the Arbitral Tribunal did not look into the materials placed before it, and the same though brought to the notice of the learned Single Judge was not considered cannot be accepted. A perusal of the order under challenge would clearly indicate that the learned Single Judge has considered the same. In view of the above, the contentions put forth by the appellant's side do not carry any merit whatsoever, and the appellant did not make out any ground to interfere with the award. The learned Single Judge was perfectly correct in dismissing the OP, and hence the order of the learned Single Judge has got to be affirmed. 14.In the result, this original side appeal fails and the same is dismissed confirming the order of the learned Single Judge. The parties are directed to bear their own costs. Consequently, connected MP is also dismissed. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar. nsv https://hcservices.ecourts.gov.in/hcservices/ To The Sub Assistant Registrar Original Side, High Court, Madras 1 cc to Mr.Nageswaran, Advocate, Sr. 3023 1 cc to M/s. N. Thiagarajan, Advocate, SR. 3188 OSA No.10 of 2010 AKR (CO) kk 28/1 https://hcservices.ecourts.gov.in/hcservices/