THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA CIVIL MISCELLANEOUS APPEAL Nos.361 AND 362 OF 2001 COMMON ORDER: (per Hon’ble Sri Justice V.V.S.Rao) As these two appeals arise out of common order, dated 10.07.2000, in O.P.Nos.41 and 43 of 1996 on the file of the Court of the III Senior Civil Judge, City Civil Court, Secunderabad, it is expedient to dispose of the appeals by common order. The appellant is the society engaged in the business of selling books including those on Gandhian Philosophy, Ramakrishna Mission, Geeta Press etc. On being approached by appellant, first respondent granted licence for setting up a bookstall in Secunderabad Railway Station. An agreement was entered into on 14.11.1983. Railways received complaints from passengers to the effect that appellant was selling unauthorized publications and pornography books. Therefore, railway authorities terminated the contract on 25.06.1987 and directed appellant to remove bookstall. Appellant alleges that due to such termination and consequent removal of the bookstall, it sustained loss of Rs.1,13,530/-. Therefore, they invoked clause 25 of the Agreement and sought appointment of sole arbitrator to resolve dispute, in vain. They, therefore, filed a petition under Sections 5, 8, 11 and 12 of the Arbitration Act, 1940 on the file of the III Additional Judge, City Civil Court, Secunderabad. The same was allowed and a retired District Judge was appointed as sole arbitrator. Before the arbitrator, appellant raised five claims. The claims were opposed by Railways. The arbitrator framed three substantive issues, namely, (i) What was the market value of the wooden structure, in which, books used to be kept on the date of its disappearance from the place where it used to stand; (ii) What was the value of the books kept in the wooden structure on the date of its disappearance; and (iii) What are the damages, if any, sustained by appellant? To substantiate its claim, appellant examined three witnesses and marked Exs.A.1 to A.32. On consideration of evidence, learned arbitrator on issue No.1 came to the conclusion that the appellant suffered damage and awarded Rs.24,000/- as cost of wooden structure. The cost of the books which was subject matter of issue No.2 was assessed at Rs.5,000/- and on issue No.3, learned arbitrator awarded Rs.25,000/- towards mental agony. In addition to this, consolidated amount of Rs.10,000/- was awarded towards interest. Thus, in total, the award for Rs.64,000/- with subsequent interest at 12% from the date of the award was passed. The appellant then filed O.P.No.41 of 1996 (out of which C.M.A.No.362 of 2001 arises) under Section 17 of the Arbitration Act to make the award rule of the Court and for award of interest @ 24% per annum. Railways filed O.P.No.43 of 1996 out of which (C.M.A.No.361 of 2001 arises) under Sections 30 and 33 of the Arbitration Act to set aside the award. These two O.Ps., as noticed supra – were dealt with together. The learned III Senior Civil Judge, City Civil Court, Secunderabad, allowed O.P.No.43 of 1996 filed by Railways and partly allowed O.P.No.41 of 1996 only to the extent of Rs.5,000/- towards Arbitrator fees. In this appeal, learned counsel for appellant submits that the Court was in error in setting aside the award for the following reasons. Clause 10 of the Agreement which grants immunity for Railways from the claims for loss or destruction of bookstall, would only be operative during the period of subsistence of licence and the same cannot be claimed by Railways. Secondly, when the arbitrator awarded damages for the loss of wooden stall and damages for the loss of books, impliedly the arbitrator agreed with the appellant that the termination of licence and consequent removal of wooden stall is arbitrary and therefore, the learned Judge ought not to have interfered with the award. Lastly, it is submitted by appellant that after issue of termination order on 25.06.1987, the appellant addressed Ex.A.4 letter seeking time, that in response thereto Railways sent Ex.A.6 communication extending time and within two days thereafter highhandedly removed wooden stall though as per the contract, it is the licencee who has to remove the wooden stall from its place. He relies on the decision of the Bombay High Court in Godrej Properties & Investments Limited v Tripura Construction, Mumbai[1] in support of the contention that when each claim is dealt with by the Arbitral Tribunal with reference to evidence on record, ordinarily, the Court ought not to have interfered and set aside the award. Learned standing counsel for South Central Railway submits that the arbitral Tribunal committed serious error in awarding the damages without recording specific findings as to the breach committed by Railways and/or the termination of licence being illegal. He would also urge that the award of the arbitral Tribunal is beyond the terms of the contract and he did not even refer to relevant clauses. When the award passed by Arbitrator is not supported by any evidence, the Court below was justified in setting aside the award. Lastly, he submits that when once the arbitrator awarded damages towards cost of wooden structure, loss of books and mental agony, awarding consolidated amount of Rs.10,000/- towards interest is illegal and wholly unjustified. Learned counsel also attacked the award insofar as the same awarded damages for mental agony. He placed reliance on Associated Engineering Company v Government of Andhra Pradesh[2], Secretary, Irrigation Department, Government of India v G.C.Roy[3], Steel Authority of India Limited v J.C.Budharaja[4], Ghaziabad Development Authority v Union of India[5], Central Bank of India v Ravindra[6], Sikkim Subba Associates v State of Sikkim[7], Northern Railway v Sarvesh Chopra[8] and Ramnath International Construction Private Limited v Union of India[9]. The rival submissions throw up the only point for consideration as to whether the Court below was justified in setting aside the award under Section 30 of the Arbitration Act, 1940. The facts which are not disputed are as follows. South Central Railway granted licence to appellant, which culminated into an agreement dated 14.11.1983. As per the agreement, appellant was authorised to sell only such books which are permitted under licence. Be it noted, statedly appellant is a Society started by late Acharya Vinoba Bhave and was engaged in selling books published by Ramakrishna Mission, Gandhian Philosophy and Geetha Press. It was not authorised to sell Pornography books or books not authorised by Railways. When the complaint was received, the licence was terminated on 25.06.1987. The appellant did not challenge it and it has become final. Having acquiesced in the termination order, the appellant then addressed Ex.A.4, letter requesting for time for removing wooden stall. In reply thereto, Ex.A.6 was sent asking the appellant to remove the wooden stall immediately. On 02.06.1989, two years thereafter, Railways removed the wooden stall and shifted to a place outside the Railway Station. In this background, the question before the arbitrator ought to have been whether Railways acted within four corners of the licence agreement. Curiously, no finding is recorded by arbitrator on any of these matters. We are convinced that unless and until the arbitrator records a finding with regard to any breach committed by South Central Railway, the question of awarding damages would not arise. A perusal of clauses 10 and 23 of the agreement would support such a view. The submission that clause 10 of the agreement operates only during the subsistence of licence is misconceived. When the licence was terminated, the obligations of the parties with regard to the articles in the bookstall are certainly covered by licence. As noticed supra, the arbitral Tribunal assessed damages without recording any clear finding on the breach of the clause. It appears there is no evidence placed by the appellant even with regard to damages suffered by it. Indeed, in paragraph 7 of the award, arbitral Tribunal observed that “no documentary proof was produced on behalf of the petitioner to prove the cost of construction of the wooden structure in question. The person, who prepared the structure, was not examined by petitioner to establish the amount spent towards the purchase of wood and payments made to the persons who prepared it. Under these circumstances, the only way to estimate the value of the structure during the relevant period will be to deduct some reasonable amount from the estimate given by P.W.3.” This would conclusively show that no evidence was placed to arrive at such conclusion that the cost of the wooden stall would be Rs.24,000/-. That in the absence of any evidence, there cannot be any sustainable award is well settled proposition of law. (See Sikkim Subba Associates v State of Sikkim[10]). Learned arbitrator awarded damages towards mental agony. Whether it is permissible in law? The question is no more res integra. I n Ghaziabad Development Authority (supra), Supreme Court considered the question and laid down that damages for mental agony for breach of ordinary commercial contract is not permissible in law. We may excerpt the relevant placitum as below (paras 6,7 and 8 of SCC). The ordinary heads of damages allowable in contracts for sale of land are settled. A vendor who breaks the contract by failing to convey the land to the purchaser is liable to pay damages for the purchaser’s loss of bargain by paying the market value of the property at the fixed time for completion less the contract price. The purchaser may claim the loss of profit he intended to make from a particular use of the land if the vendor had actual or imputed knowledge thereof. For delay in performance the normal nature of damages is the value of the use of the land for the period of delay, viz. usually its rental value (see Chitty on Contracts, ibid, para 26.045). In our opinion, compensation for mental agony could not have been awarded as has been done by the MRTP Commission. However, the learned counsel for the respondents has invited our attention to Lucknow Development Authority v M.K. Gupta2 wherein this Court has upheld the award by the Commission of a compensation of Rs .10,000 for mental harassment. The basis for such award is to be found in paras 10 and 11 wherein this Court has stated inter alia— “[W]here it is found that exercise of discretion was mala fide and the complainant is entitled to compensation for mental and physical harassment then the officer can no more claim to be under protective cover. When a citizen seeks to recover compensation from a public authority in respect of injuries suffered by him for capricious exercise of power and the National Commission finds it duly proved then it has a statutory obligation to award the same.” (SCC p.264, para 11) The Court has further directed the responsibility for the wrong done to the citizens to be fixed on the officers who were responsible for causing harassment and agony to the claimants and then recover the amount of compensation from the salary of officers found responsible. The judgment clearly shows the liability having been fixed not within the realm of the law of contracts but under the principles of administrative law. We do not find any such case having been pleaded much less made out before the Commission. Indeed, no such finding has been arrived at by the Commission as was reached by this Court in the case of Lucknow Development Authority (supra). The award of compensation of Rs.50,000 for mental agony suffered by the claimants is held liable to be set aside. The claims de hors the contract or beyond the terms of the contract cannot be subject matter of arbitral Tribunal. This view is also well settled and it is not necessary to burden this order by copious reference to decided cases. Suffice to mention the cases of Associated Engineering Company (supra), Secretary, Irrigation Department, Government of India v G.C.Roy (supra), Steel Authority of India Limited v J.C.Budharaja (supra), Ghaziabad Development Authority (supra), Central Bank of India v Ravindra (supra), Sikkim Subba Associates (supra), Northern Railway v Sarvesh Chopra (supra) and Ramnath International Construction Private Limited (supra). As the very award of amounts towards mental agony and loss of books and wooden structure are themselves unsustainable, it is not necessary to go into the other questions of awarding consolidated amount towards interest. The appeal under Section 39 is a continuation of proceedings under Section 30 of the Arbitration Act. Therefore, we have independently examined the award and do not find any strong reason to interfere with the order passed by lower Court setting aside the award. In the result, for the above reasons, these appeals fail and are accordingly dismissed. No costs. _______________ (V.V.S.RAO, J) ____________________ (B.N.RAO NALLA, J) 26.10.2009 pln [1] 2003 (3) R.A.J. 110 (Bom) [2] AIR 1992 SC 232 [3] AIR 1992 SC 732 [4] (1999) 8 SCC 122 [5] (2000) 6 SCC 113 [6] AIR 2001 SC 3095 [7] (2001) 5 SCC 629 [8] (2002) 4 SCC 45 [9] AIR 2007 SC 509 [10] (2001) 5 SCC 629