IN THE HIGH COURT OF JUDICATURE AT PATNA MA No.576 of 2008 1. Central Warehousing Corporation, 4/1 Siri Institutional Area, Khel Gaon Marg, New Delhi through its Managing Director. 2. Regional Manager, Central Warehousing Corporation, Regional Office, Maurya Lok Complex, Patna .. .. .. Appellants. Vs. Ram Narayan Indoria, Proprietor of M/s. Aditya Enterprises – Ex H&T Contractor, Raja Kothi Bal Mandir Road, Kishanganj-255107 (Bihar) .. Respondent. … For the appellants : Mr. Sidheshwari Pd. Singh, Senior Advocate, Mr. Krishna Kishore Sinha, Mr. Sunil Kumar Sharma and Mr. Chakradhari Sharan Singh, Advocates. For the respondent : Mr. Chitaranjan Sinha, Senior Advocate, Mr. J.S.Arora and Mr. Sunil Kumar Karn, Advocates. … 12 25-2-2009 The Central Warehousing Corporation (hereinafter referred to as „the C.W.C.‟) has filed the present appeal against the judgment and order of the Sub Judge, Patna passed in Misc. case No. 6/2001 under section 34 of the Arbitration and Conciliation Act (hereinafter referred to as „the Act‟) for setting aside the award made by Mr. G. L. Tandon, the sole arbitrator on 9.11.2000. The respondent in this appeal M/s. Aditya Enterprises is represented through its proprietor. The appellants entered into a contract with respondent for handling and transportation of food grains, fertilizers including rake handling at Central Warehouse, Kishanganj. The period of contract was between 8.10.1993 to 7.10.1995 which was extended up to 22.4.1996. They also entered into an ad hoc contract from 23.4.1996 to 22.7.1996. Under the said contract the respondent was to carry food grains and fertilizers from the railway yard, Kishanganj to Central Warehouse, Kishanganj on the terms and conditions laid down in the contract. 2 Three issues have been raised in this appeal. The appellants firstly contend that the sole arbitrator could not have passed an order with respect to claims which come within “excepted matters”. The second point raised on behalf of the appellants is that the sole arbitrator erred in law in taking into account the claims made out in the legal notice viz-a-viz the claims filed during the proceeding by the respondent. Lastly, the appellants submit that the order of the sole arbitrator is a non-speaking order and as such is fit to be set aside. Dealing with the first question raised on behalf of the appellants regarding the power of the courts to set aside an award it would be proper to refer to section 34 of the Arbitration act which reads as under : “Application for setting aside arbitral award .- (1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the court only if- (a) the party making the application furnishes proof that- (i) a party was under some incapacity; or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was 3 not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or “(b) .. .. .. .. .. “ The words “may be set aside” in section 34 of the Act are imperative and take away the jurisdiction of the courts to set aside an award except on one or more grounds specified in the section. The appellants claim that their case comes within the purview of section 34 (a) (iv) of the Act. The submission is that the contract had excluded certain matters which were not subject to the jurisdiction of the arbitrator. This court will refer to clauses of the contract which are 4 essential for deciding the issue. Clause XIX of the contract reads as follows : “All disputes and differences arising out of or in any way touching or concerning this agreement whatsoever (except the matter referred to in sub clause 27 of clause XXI and any matter the decision of which is expressly provided for in the contract) shall be referred to the sole arbitrator or any person appointed by the Managing Director, Central Warehousing Corporation, New Delhi . . . . . .” The clause which indicates that the Regional Manager would be the final authority is at clause XXI (4) of the agreement which is quoted below : “The contractors shall take adequate steps and necessary precautions to avoid wastage and damage to food grains, fertilizers etc., during the loading unloading of trucks / carts / wagons / any other transport vehicles at the railheads / godowns or any other loading/unloading point. The contractors shall be liable for any loss which the Corporation may suffer on account of the bags not being properly handled. The decision of the Regional Manager regarding such loss shall be final and binding on the contractors. They shall spread their own tarpaulins or gunny bags at the loading / unloading points to avoid wastage and damage.” Sub clause 27 of clause XXI reads as follows : 5 “They shall be liable to make good the value of any shortage, wastage, loss or damage to the goods in transit at three times the issue rate / deposit rate / market rate whichever is higher for all food grains and commodities including fertilizer other than sugar and four times the issue rate / deposit rate / market rate whichever is higher in respect of sugar on the date of incident except when R.M. (whose decision shall be final) decides that the difference between the weights taken at the dispatching and receiving ends is negligible and is due to discrepancies between the scales, gain or loss in moisture or other causes beyond the contractor‟s control.” After examining the relevant provisions I now turn to the facts which have been pleaded and argued in this case. From the documents filed in court it would appear that the C.W.C. had itself referred the matter to the arbitrator for deciding the matter under sub clause 27 of Clause XXI. This would be apparent from Annexure 13, the counter claim contained in the affidavit filed by the C.W.C. wherein the C.W.C. has sought adjudication on amongst others on the following dispute, that is, transit shortage of 238 quintals of wheat has occurred while carrying rake to the warehouse from the rail head in the months of March-April, 1995. Three times the value of shortage of wheat @ Rs. 450/- per quintal is recoverable from the claimant, which works out to Rs. 3,21,300/- as per sub clause 27 of clause XXI of the tender schedule and further it is stated that in the counter claim “it is pleaded that a perusal of the above facts be made 6 and the matter be considered in the light of the facts presented above.” Mr. Sidheshwari Prasad Singh, learned Senior Advocate appearing on behalf of C.W.C. submitted that this letter refers to sub clause 27 of clause XXI and in fact by this letter the C.W.C. has brought to the notice of the arbitrator the provisions of the clause and as such the arbitrator ought not to have given an award on the claims with respect to the matters under the said clause as they were beyond his jurisdiction. The submissions are not acceptable to this court. From the pleadings in the counter claim filed on behalf of the C.W.C. it cannot be held and interpreted to mean that the C.W.C. was bringing to the notice of the arbitrator that he had no jurisdiction to decide matters under sub-clause 27 of clause XXI. Rather, the opposite is true. The C.W.C. has specifically made a prayer that the dispute mentioned at paragraph 4 of the counter claim should be considered by the arbitrator. Learned counsel refers to certain decisions rendered by the Supreme court in the cases of Prabartak Commercial Corporation Limited vs. Chief Administrator, Dandakaranya Project & Another, (1991) 1 SCC 498 and General Manager, Northern Railways & Another vs. Sarvesh Chopra, (2002) 4 SCC 45 to substantiate his submission that the arbitrator could not have adjudicated on excepted matters as they were to be decided by the Regional Manager. In the case of Prabartak Commercial Corporation (supra) reference was made under section 20 of the Act by the court. The respondents contended that the matter in dispute was outside the scope of the arbitration clause and filed an objection before learned 7 Additional District Judge. An Advocate was appointed by the arbitrator. The arbitrator entered upon the reference and passed the award. The matter came before the High Court and the High court held that in view of the ambit of the clause of agreement the arbitrator could not have entered into the dispute covered by the clause in question and, thus, held that the awards were without jurisdiction and void. The Supreme court upheld the order of the High court. I may point out here that the objection with respect to jurisdiction of the arbitrator was raised at the very initial stage and before the award was passed, whereas, in the present case this question was not raised before the arbitrator and was sought to be raised before the Sub Judge to show that the award is without jurisdiction and void. In the case of General Manager, Northern Railways (supra), a single Judge of the Delhi High court directed two claims to be referred to the arbitrator but formed an opinion that clause 3 to 6 were “excepted matters”. An intra court appeal was filed by the respondents and the division bench came to a finding that the clauses were not covered by “excepted matters”. The appellants moved the Supreme court. Under those circumstances the court held that despite an objection that certain clauses of the agreement / contract came within the definition of “excepted matters” it was referred to the arbitrator and in spite of such reference having been objected to, the arbitrator gave an award and held that the award was null and void. The facts of this case are distinguishable from the facts of the present case as pointed out by the respondent in this appeal for the reasons that the C.W.C. had not filed any objection with respect to the jurisdiction 8 of the arbitrator to hear and decide the dispute with respect to the issues raised in sub clause 27 of clause XXI. On the other hand as mentioned and quoted above, the C.W.C. had filed a counter claim and subjected itself to the jurisdiction of the arbitrator by raising a claim against the items covered by the clause aforesaid. Another fact which has been stated by the respondent is that in fact the dispute with respect to claims of transit shortage were never referred to the Regional Manager for a decision and the C.W.C. has suo motu made payments in accordance with sub clause 27 of clause 21 treating the loss or damage to the goods in transit at three times the value of the goods / four times the value of the goods with respect to sugar and fertilizer respectively. Mr. Chitranjan Sinha, learned Senior Advocate appearing on behalf of M/s. Aditya Enterprises contended that in the facts of this case the plea with respect to jurisdiction has been raised for the first time after the award was prepared whereas it ought to have been raised before the arbitrator who is empowered under the Act to decide his own jurisdiction. An objection made at a belated stage by a party after having participated in the matter cannot be raised. (Chandrashekhar Singh vs. Dahu Mahto, 1983 PLJR 443). Mr. Sinha relied on a decision in the case of State of Bihar vs. Gulabi Devi, 1987 PLJR 1174 wherein it was held that “any objection regarding the appointment of the arbitrator, the procedure followed in this connection, the validity of the agreement, the observance of the provisions of section 14 of the Act and the amalgamation of various disputes in one arbitration proceeding cannot 9 be countenanced because the appellant surrendered to the arbitration without raising these objections at the appropriate stage. . . . . . ..” It was further held that “having run the gamut of the entire arbitration proceedings, it is not open to the appellant to raise this issue.” Thus, the most important aspect in this case is that the appellants did not raise the issue with respect to the jurisdiction of the arbitrator at the appropriate stage, rather, they subjected themselves to the jurisdiction by raising claims with respect to matters covered by sub clause 27 of clause XXI. Mr. Sinha referred to the case of Food Corporation of India vs. Sreekant Transport (1999) 4 SCC 491. In this case it has been noted that in the usual Governmental contracts there is an exclusion of certain matters from the purview of arbitration and a senior officer of the department usually is given the authority and power to adjudicate the same. The clause itself records that the decision of the senior officer being the adjudicator shall be final and binding between the parties. This has been defined as “excepted matters” in a Government or a semi Government contract. The factual back drop in the aforesaid case was that Sreekant Transport instituted a suit under section 20 of the Arbitration Act. Four claims were raised on behalf of Sreekant Transport. One of the claims was objected to by the Corporation as it was with respect to certain matters / disputes which were to be referred to the Senior Regional Manager of the Corporation and the clause specifically said that the decision of the Senior regional Manager would be binding and final. The court found that the Corporation itself desired an adjudication on the claim which was termed to be the 10 “excepted clause” which was to be adjudicated by the Senior Regional Manager. Thereafter, the Corporation raised the question of jurisdiction before the High Court stating therein that the arbitrator had no jurisdiction to arbitrate on disputes which came under the excepted clause. The High court found that the Corporation had relinquished or abandoned their right of adjudication in excepted matters and permitted the civil court to adjudicate on such matters. The Supreme court upheld the judgment of the High court holding that where a party gives a go by to its right of adjudication by matters covered under the excepted clause, it cannot thereafter raise a claim or contend that the award is null and void on the ground that the arbitrator had adjudicated on disputes which come under the excepted clause. The facts of the present case is identical to the aforesaid decision cited by the respondent. In the present case considering the factual back grounds that the C.W.C. had filed a counter claim inviting the arbitrator to adjudicate on the issues covered by sub clause 27 of clause XXI of the contract. They cannot now claim that the award is null and void on the ground that the arbitrator has exceeded his jurisdiction. The second point raised in this case on behalf of the appellants is that the respondent had sent a legal notice to the appellants mentioning therein claims against the C.W.C. However, when the matter came up before the arbitrator, the respondent filed a separate set of claims against the C.W.C. It is contended that the arbitrator ought to have adjudicated on the claims that had been filed before him and not on the claims that were mentioned in the legal 11 notice. In reply to the aforesaid objection raised by the appellants, the respondent has explained the details at paragraphs 5, 6 and 7 of the counter affidavit filed in this case on 6.1.2009 that the claims referred to are with respect to the two periods. The total claim of the respondent as per letter, dated 21.7.1997 was Rs. 14,58,941/- whereas the total claim as per letter, dated 25.7.1998 / 27.7.1998 was Rs. 16,47,128/-. The appellants in course of the arbitration proceeding took the objection that as the reference of disputes have been made on the basis of letter, dated 21.1.1997, the claims as given in letters, dated 25.7.1998/27.7.1998 (Annexure 4) were not liable to be considered. It has been stated that the arbitrator accepted the objection of the appellants and decided to consider the respondent‟s claims as contained in letter, dated 21.7.1997 (Annexure 3). In view of the aforesaid facts, the second point raised on behalf of the appellants has to be rejected as the appellants themselves had requested for consideration of the claims with respect to those contained in letter, dated 21.7.1997. Lastly, it has been stated on behalf of the appellants that the award is not speaking one and no reasons have been given for passing the award. This question cannot be raised by the appellants unless it is shown that there was complete non-application of mind or that the arbitrator had not considered the claims / counter claims raised by the parties. While there are cases to show that the award cannot be challenged on the ground that it is not a speaking order, on consideration of the award I find that the arbitrator has taken into consideration the claims and the counter claims filed by the 12 respondents and has given adequate reasons for coming to the conclusion with respect to the claims of the respondents. The reasons are discussed in some detail at paragraph 10 of the award. Therefore, this court cannot hold that the award is non-speaking one. While parting with the order, I must refer to the affidavit filed by the respondent at the stage when the arguments were almost at a close bringing on record several letters to show to this court that certain materials were produced before the arbitrator to show that certain payments have been made to the respondent on account of shortage, wastage, loss and damage of goods in transit after calculating the loss at three times the issue rate / deposit rate / market value of the items in question. In fact the crux of the matter lies here. The C.W.C. had suo motu calculated the losses as per the terms of sub clause 27 of clause 21 of the contract and made payments after subtracting the losses. The documents to show that payments have been produced by way of a supplementary affidavit and the claim is that the arbitrator has not dealt with each of these documents. The scope of the Miscellaneous appeal especially in a case where an award under challenge is limited and this court is not sitting in a first appeal and cannot consider and tally the documents filed on behalf of the appellants or for that matter the respondent. The payment of such claim was raised in the counter claim of the respondent which has been dealt with in the award wherein the arbitrator has held that the appellants could not show that the loss and damage was on account of any fault on the part of the respondent and the award cannot be held to be null and void by the court on any of the grounds raised by the 13 appellants. In the result, this appeal is dismissed. A.F.R,/ haque (Sheema Ali Khan, J.)