^ HIGH COURT OF CHHATTCSGARH AT BILASPUR ARBITRATEON APPEAL N0.5 OF 2008 APPELLANT Rajnish Kumar Tah Vs RESPONbENT Union of India JUD&MENT FOR CONSIDERATION Sd/- Dhirendra Mishra Judge ^..9.2008 HON'BLE MR. D.R. DESHMUKM. J ^ euy^ f Sd/- Dilip Raosaheb Deshmukh Judge ei.9.20U8 - POST FOR JUDGMENT ON 3 "SEPTEMBER. 2008 Sd/- Dhirendra Mishra Judge ojL.9.2008 HIGH COURT OF CHHATTISGARH AT BILASPUR bIVISION BENCH: HON. MR. bHIRENbRA MISHRA^_& HON. MR. b.R. DESHMUKH. JJ ARBITRATION APPEAL N0.5 OF 2008 APPELLANT Rajnish Kumar Tah, Son of Late Ramprakash Tah, Railway and Forest Contractor, resident of Pendra Road, District Bilaspur, ChhattTsgarh. Versus RESPONDENT . Union of Indi'a represented by General Manager, South Eastern Railway, Garden Reech, Calcutta-43 Present: Mr. Utkarsh Verma, Advocate for the appellant. Mr. P.S. Koshy, Advocate for the respondent. JUbGMENT (belivered on ^9.9.2008) bhirendra Mishra. J 1) The appeltant has preferred the i'nstant appeal under Section 37 of the Arbitration <& Conciliation Act, 1996 (hereinafter shatt be referred as 'Act of 1996') against the orderdated 21.9.2007 passed by the Court of learned District Judge, Bilaspur in M.J.C. No.89/2000 whereby learned District Judge has rejected the application of appellant herein filed under Section 34 of the Act of 1996 against the award dated 12.7.2000 (Annexure A-l) passed by the Sole Arbitrator. 2) Briefly stated. necessary facts for adjudication of this appeal are that a contract agreement No.50/t)EN-BSP/95-96 dated 9.8.1995 was entered. between the appellant and the respondent-South Eastern Raitways for the work "proposed Sand blanketing o-f under traffic of weak formation in '^ between Uslapur to Kalmitar stations and in selected locations of kilometers 720 to 730 and 733 to 739" valued at Rs.5,17,700/-. The contractuQl period for completion of work was three months i.e. from 27.6.1995 to 26.9.1995. However, the appellant was granted extension up to 30.3.1996 without imposing any penalty. On the application of the appellant, he was further granted extension upto 15.5.1996 without imposing penalty and thereafter extension from 16.5.1996 to 15.6.1996 was granted with imposition of penalty ©i-% or part thereof on the contract value. The appellant collected 729.39 cubic meter of sand by 6.4.1996 and he was paid 80% towards the supplied sand, as per contract co.nditions. Vide letter No.50/95-96/RKT dated 25.4.1996 the appellant was asked by the respondent to insert already supplied <& measured sand in the track and stop further supply till the sand already collected is consumed in view of the ensuing monsoon, The contractor on the other hand claimed that he has already collected remaining 1890 cubic meters sand along the track/cess near the site by last week of May, 1996 and requested for measurement. Further grievance of the appellant was that due to non-payment towards the sand supplied by him, he was facing financial crisis and therefore, he could not complete the work of spreading sand as directed. The contractor/appeltant raised above dispute before the respondent Railway and demanded for arbitration and on failure of the respondent Railway, the appellant approached the Gourt for appointment of Arbitrator. His application was allowed and the General Manager of the respondent Railway was directed to arbitrate the matter himself or through any officer of the Railway. Whereupon, Shri bevendra Kumar, Senior Divisional Mechanical Engineer (Diesel) was appointed 3 as Sole Arbitrator by the General Manager vide his memo dated 23.6.1999 and the dispute was referred to the Sole Arbitrator for adjudication. The Sole Arbitrator, vide impugned award, negated the contention of the appellant that he could not execute the contract and insert the sand, as directed by the Railways, because of financial crunch and directed the contractor to stack the sand collected by -him and after stacking joint measurement was ordered. The difference of value of 80% of the cost of the quantity of sand jointly measured and Rs.31,677/- was ordered to be paid by the Railways to the claimant. Balance cost of sand retained by the Raitway was to be paid to the contractor with the progress of work of sand blanketing. Sand blanketing work was to be completed by 15.12.2000. If the claimant/ appellant herein is not able to execute the work of sand blanketing by 15.12.2000, 20% of the cost of the sand, jointly measured, including 729 cubic meter of sand retained by the Railway is to be forfeited. Other claims against Item Nos. 2, 3, 4, 5, 6. 7. 8, 12, 13 & 14 were rejected. However, claim of the appellant towards refund of initial security deposit, refund of 10% security deposit recovered from the bills and recovery of 20% additional security deposits from the bills was allowed on the condition of successful completion of contract by 15.12.2000. Appellant filed an application under Section 34 of the Act of 1996 for setting aside the above award before the learned District Judge, Bilaspur. The District Jud9e rejected his application with ah observation that no ground. enumerated under Section 34 of the Act, isavailable to the applicant for setting aside the award and the Arbitrator has passed the award after properly considering the facts of claim and counter claim preferred by the parties in accordance with law. 3) Learned counsel for the Qppellant submits that learned District Judge failed to appreciate that the Sole Arbitrator while deciding claim No.l, related to transportation and stacking of sand along the side of track has accepted that the sand was supplied by the appellant, even then directed him to collect the scattered sand and restack it. This portion of the award is beyond the scope of reference and contrary to the submissions mode by the respective parties. Direction of joint measurement after restacking of sand after five years of its collection was absurd and meaningless, as by passage of time quantity of sand collected by the appellant at the site would not be available for restacking. Relying upon the judgment of Hon'ble Apex Court reported in matter of b.C.M. Ltd. etc. Vs. Municipal Corporation of Delhi and another reported in AIR 1997 SC 3225, it wasargued that the Arbitrator cannot gobeyond the scope of his reference and if he has exceeded his jurisdiction, the award to that extent can be set aside provided that the part of the award being quashed is severable from the rest. Further relying on the judgment in the matter of State of Kerala and another Vs. V.P. Muralidharan Nair reported in AIR 1991 Kerala 89 it was contended that where the award on the faceof I't is vague, the Courts are not obliged to pass a decree based on such award where the award calls for other recordsor evidence so as to be the basis for an executable decree the award is incomplete. 4) Qn the other hand, learned counsel for the respondent Railway contended that the appellant was awarded contract on his acceptance of the conditions, certain rules & regulation and general conditions of contract of the ^ respondent Railway. Agreement clearly mentioned that the work was to be executed under caution order of 20 kms per hour under the supervision of the In-charge PWI. The work was to be completed within three months, however, on the request of the claimant/appellant extension upto 15.5.1996, without imposition of any penalty, was allowed. Thereafter, further extension of one month up to 15.6.1996 with penalty of i-% of the contract value was granted, however, the appellant could collect only 729 cubic meter of sand against the total quantity of 2500 cubic meter. He also failed to insert the sand, so collected, QS per direction of the respondent Railways dated 25.4.1996. Clause 20 (1) of the Oeneral Conditions of the Contract, Volume-II envisages that where the work consists of several parts, the order in which the several parts of the works shall be executed, shall be decided by the in-charge Engineer and the Contractor shall execute without delay all orders given by the Engineer from time to time. In the instant case the appellant contractor was specifically directed by the In-charge Engineer to insert measured 729 cubic meter sand in the track and not collect sand before completing the work of insertion in view of the onset of monsoon. In these circumstances, the Sole Arbitrator, keeping in mind the above facts, passed a judicious award allowing the appellant contractor to stack the available sand at the site of contract and after such stacking joint measurement is to be recorded and on the basis of measyrement, the appellant was to be paid 80% of the value of stacked sand, The appellant was further allowed time up to 15.12.2000 to complete the work in all respects. The appellant contractor instead of executing the work challenged the award under Section 34 of the Act of 1996 though no ground was Qvailable to him. 6 :t'^: 5) We have heard learned counsel for the parties. We have perused the impugned order as also theaward passedby the Sole Arbitrator and the documents availabte in the record of learned District Judge. 6) Appellant has impugned the award mainly on two grounds i.e. i. The Sole Arbitrator has traveled beyond the scope of reference and contrary to submissions of respective parties. ii. The award is vague and irrational. 7) So far as the contention of appellant that the Arbitrator has traveled beyond the scope of reference and contrary to the submissions of the parties is concerned, from perusal of the nature of dispute between the parties it is evident that the contractor has claimed that as per scope of agreement he was required to collect 2500 cubic meter of sand at the given location along the track. He was further required to insert sand in the track for the purposes of strengthening. He had collected the total quantity of sand under the agreement, however/a part of sand collected by him was not measured and the respondent directed him not to collect the remaining quantity of sand before inserting the measured 729 cubic meter of sand in the track. Therefore, in the considered opinion of this Court the basic dispute between the parties requiring adjudication was actual quantity of sand collected by the appellant at the contract site and therefore, the Arbitrator has not traveled beyond the scope of reference, as contended by the appellant. 8) So far as the contention of appellant that directionof the Sole Arbitrator to restack the sand at the site, that too after five years of collection, is irrational <& meaningless, as the sand woutd not remain at the site after five monsopns and five summers, is concerned, the In-charge Engineer directed the appellant contractor to first insert the sand already collected by him in the track in view of the onset of monsoon and stopped him from collecting sand before completing the work of insertion of measured sand. The respondent in its reply has denied any knowledge of collection of sand by the appellant at the site or its measurement, therefore, direction of the Sole Arbitrator to restack the sand available at site and conduct joint measurement thereafter appears to be in the interest of the parties in the given circumstances and there is no vagueness in the aforesaid direction, as payment towards collected sand could be made only after joint measurement. 9) As already observed, in the matter of DCM Ltd. (supra) the Hon'ble Supreme Court has held that it is well established that an arbitrator cannot go beyond the scope of his ' reference. If he has exceeded his jurisdiction, theaward to that extent can be set aside provided that the part of the award being quashed is severable from the rest. However, in the instant case, as already pointed out in the foregoing paragraphs, the Arbitrator has addressed the core issue of dispute between the parties. 10) In the matter of V.P. Muralidharan (supra) while answering Claim No.l in the award the learned Arbitrator left open many side issues, involved in it, to be determined in execution. beprecating the practice of Arbitrators leaving such points to be decided on evidence in execution stage it was observed that "apart from the language, the determination calls a further calculation based upon several records such as the measurement books a matter on which there may still be scope for controversy. Why the arbitrator should not at least take the trouble of doing this work rather than leaving it to the parties to fight out later is a question one may naturally ask, particularly one comes across such terms in awards frequentty, When such anaward comes up before a Court for passing a decree, a decree follows. The trouble commences when the execution startsand then all books are called for, evidence let in and then begins the real fight which take parties to this Court and this Court quite often spends a lot of time in^the matter. Attention of few minutes by the arbitrator could obviate these wasteful exercises." It was further observed that u Courts are not obliged to pass a decree based on the awards unless the awards are self-contained, if the award calls forother records or evidence so as to be the basis for an executable decree the award is incomplete". However, in the instant case no such vagueness exists as the Arbitrator in clear terms has permitted the contractor to restack sand collected by him and after said restacking joint measurement has been directed. 11) In the matter of Numaligarh Refinery Ltd. Vs. baelim Industrial Co. Ltd. reported in (2007) 8 Supreme Court Cases 466 while considering the scope of interference by the Courts in the award passed by the arbitrator it has been hetd that the Courts shatl not ordinarily substitute their interpretation for that of the arbitrator. If the porties with their eyes wjde open have consented to refer the matter to the arbitration, then normally the finding of the arbitrator should be accepted with demur. There is no quarrel with this tegal proposition. But in a case where it is found that the arbitrator has acted without jurisdiction and has put an interpretation on the clause of agreement which is wholly contrary to law then in that case there is no prohibition for the courts to set things right. The general 9 consensus of the view emerging from various judgments of the Supreme Court is that the court should not sit in appeal and normally should not interfere with the views of the arbitration in interpretation of the terms of agreements interpreted by the arbitrator when the arbitratop is appointed with consent of parties. 12) In the matter of Mcbermott International Inc. Versus Burn Standard Co. Ltd. and others reported in (2006) 11 Supreme Court Cases 181 the Hon'ble Supreme Court while dealing with the legal scope of challenge to the award in Para-52 held thus:- "52. 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 circumstancesonly, like, in case of fraud or bias by the arbitrators, violation of natural justice/etc. The court cannot correct the errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the 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 exclijde the court's jurisdiction by opting for arbi'tration as they prefer the expediency and finality offered by it." In the instant case, there is no allegation of fraud or bias by the Arbitrator. The award was passed after affording opportunity of hearing to the parties and there is noallegation of violation of natural justice. 10 13) So far as the contention of theappellant that four different types of works given in the schedule of Annexure-A does not provide the process, manner or the sequence in which each work was to be executed and it was the prerogative of the contractor to execute the work in the manner and sequence, which was convenient to him, is concerned, in view of Clause 20 (1) of the Generat Terms <& Conditions Vot. II, the work was to be executed as per orders given by the Engineer In- charge from time to time and thus/the appellant was obliged to execute the work as per directions of the Engineer In- charge. 14) For the aforesaid reasons, this Court is of the opinion that the learned bistrict Judge has rightly rejected the application of the appetlant preferred under Section 34 of the Act of 1996 with an observation that the appellant has failed to establish any ground enumerated under section 34 of the Act of 1996 for impugning the award passed by the Sole Arbitrator. 15) In the result, the appeal preferred by the appellant has no substance, the same deserves to be dismissed and it is hereby dismissed at the admission stage itself. 16) No order as to costs. Sd/- Dhirendra Mishra Judge Sd/- Dilip Raosaheb Deshmukh Judge Roshan/-