Case: M/S Cochin Shipyard Ltd Vs. M/S Apeejay Shipping Ltd

award contains reasons, the interference therewith would still be not available within the jurisdiction of the court unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law and further an error apparent on the face of the record would not imply closer scrutiny of the merits of documents and materials on record. 17. In Hari Om Maheshwari (supra), the Court after referring to the decisions in Arosan Enterprises Ltd. (supra) and Allied Constructions (supra) opined thus:- From the above it is seen that the jurisdiction of the court entertaining a petition or application for setting aside an award under Section 30 of the Act is extremely limited to the grounds mentioned therein and we do not think that grant or refusal of an adjournment by an arbitrator comes within the parameters of Section 30 of the Act... 18. In Wig Brothers (supra) while dealing with the challenge under Sections 30 and 33 of the 1940 Act, the Court opined that a court while considering a challenge to an award under Sections 30 and 33 of the 1940 Act, does not sit as an appellate court and it cannot reappreciate the material on record. The Court further proceeded to state that an award is not open to challenge on the ground that the arbitrator had reached a wrong conclusion or had failed to appreciate some facts, but if there is an error apparent on the face of the award or if there is misconduct on the part of the arbitrator or legal misconduct in conducting the proceedings or in making the award, the court will interfere with the award. In the said case reference was made to Rajasthan State Mines and Minerals Ltd. (supra) and certain passages were quoted. We think it seemly to reproduce the said paragraphs:- 22. … The rates agreed were firm, fixed and binding irrespective of any fall or rise in the cost of the work covered by the contract or for any other reason or any ground whatsoever. It is specifically agreed that the contractor will not be entitled or justified in raising any claim or dispute because of increase in cost of expenses on any ground whatsoever. By ignoring the said terms, the arbitrator has travelled beyond his jurisdiction as his existence depends upon the agreement and his function is to act within the limits of the said agreement. This deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part but it may tantamount to mala fide action. 23. It is settled law that the arbitrator is the creature of the contract between the parties and hence if he ignores the specific terms of the contract, it would be a question of jurisdictional error which could be corrected by the court and for that limited purpose agreement is required to be considered. … 19. We have referred to series of decisions to appreciate the concept of misconduct and how a party is entitled to make it the fulcrum of assail in his objection under Sections 30 and 33 of the 1940 Act. Misconduct, as has been laid down, does not always have a moral connotation. To elaborate, it may not have any connection with the individual/personal conduct of the arbitrator. The said conduct would be in sphere of moral misconduct. As far as legal misconduct is concerned, as the authorities would demonstrate, the same must be manifest or palpable from the proceedings before the arbitrator. To elaborate, a person urging the ground of legal misconduct has to satisfy the court from the records of the arbitral proceedings that there has been a legal misconduct on the part of the arbitrator as a consequence of which the award gets vitiated. The question of adducing any kind of oral evidence to substantiate the plea or stand or stance does not arise. It has to be shown from the proceedings carried on before the arbitrator and the evidence adduced before the arbitrator. Evidence cannot be adduced in court to substantiate the challenge on the score of legal misconduct. We are not entering upon any discussion pertaining to moral misconduct as that is not the issue in the case at hand. The decision in Fiza Developers and Inter-Trade Private Limited (supra) has been rendered by this Court while interpreting Section 34 of the 1996 Act. The context being different, we are not inclined to apply the principles enumerated therein to the objection filed under Sections 30 and 33 of the 1940 Act, for the simon pure reason that the authorities are plenty to make it limpid that the issue of legal misconduct on the part of the arbitrator should be manifestly discernable from the record. 20. In the instant case, the High Court has granted liberty to the respondent herein to examine its General Manager to substantiate its claim and further opining that the said evidence should be considered within the parameters of Sections 30 and 33 of the 1940 Act. The learned senior counsels for the parties have pressed their argument relating to legal misconduct. Both the learned senior counsels for the parties have construed the order that the said liberty has been granted to establish the misconduct and precisely that is the subject matter of challenge before us. Therefore, we have clearly opined that to substantiate a stance of legal misconduct on the part of the arbitrator, examination of any witness in court is impermissible. It is because it must be palpable from the proceedings and the learned single Judge has already directed that the proceedings before the arbitrator to be requisitioned by the civil court. Least to say, it will be open for the respondent to establish the ground of legal misconduct from the arbitral proceedings. We may hasten to add that we have not said anything as regards legal misconduct pertaining to the present case, although we have referred to certain authorities as regards the legal misconduct.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]4. At the very outset, we are obliged to state that the respondent has not challenged the order passed by the High Court and, therefore, as far as examination of the umpire is concerned, it stands foreclosed. As far as liberty to examine the witness to substantiate the claim for the rule making Court is concerned, it is contended by Mr. Ranjit Kumar, learned Solicitor General for the appellant, that the respondent has been allowed to examine the employee as a witness to prove the misconduct of the learned arbitrator in conducting of the arbitral proceedings as the grounds had been raised pertaining to grant of adequate opportunity to the respondent and the recording of minutes. In essence, the stand of the respondent was that there had been violation of the principles of the natural justice by the learned arbitrator. It is urged by the learned senior counsel for the appellant that it is totally unwarranted to examine witnesses for the purpose of substantiating the claims before the Court which has the authority to accept the objection under Sections 30 and 33 of the 1940 Act or to pass a decree in terms of the award. In essence, the attack on the order by Mr. Ranjit Kumar is that the witness No. 2, General Manager, could not have been permitted by the High Court to be examined as a witness in the Court to prove any kind of legal misconduct, for the same has to be demonstrated from the records of the arbitral proceedings as well as the evidence adduced before the learned arbitrator. It is further contended that the witness sought to be examined had already been examined before the learned arbitrator and his evidence can be read by the trial court to discern and decide if there is any perversity of approach by the arbitrator. Learned Solicitor General, to bolster his submissions, has placed reliance on Arosan Enterprises Ltd. v. Union of India and Another (1999) 9 SCC 449 ), Inder Sain Mittal v. Housing Board, Haryana and Others (2002) 3 SCC 175 ), State of U.P. v. Allied Constructions (2003) 7 SCC 396 ), State Bank of India v. Ram Das and Another (2003) 12 SCC 474 ), D.D. Sharma v. Union of India (2004) 5 SCC 325 ), Hari Om Maheshwari v. Vinitkumar Parikh (2005) 1 SCC 379 ), Bhagawati Oxygen Ltd. v. Hindustan Copper Ltd. (2005) 6 SCC 462 )and Oil and Natural Gas Corporation v. Wig Brothers Builders and Engineers Private Limited (2010) 13 SCC 377 )19. We have referred to series of decisions to appreciate the concept of misconduct and how a party is entitled to make it the fulcrum of assail in his objection under Sections 30 and 33 of the 1940 Act. Misconduct, as has been laid down, does not always have a moral connotation. To elaborate, it may not have any connection with the individual/personal conduct of the arbitrator. The said conduct would be in sphere of moral misconduct. As far as legal misconduct is concerned, as the authorities would demonstrate, the same must be manifest or palpable from the proceedings before the arbitrator. To elaborate, a person urging the ground of legal misconduct has to satisfy the court from the records of the arbitral proceedings that there has been a legal misconduct on the part of the arbitrator as a consequence of which the award gets vitiated. The question of adducing any kind of oral evidence to substantiate the plea or stand or stance does not arise. It has to be shown from the proceedings carried on before the arbitrator and the evidence adduced before the arbitrator. Evidence cannot be adduced in court to substantiate the challenge on the score of legal misconduct. We are not entering upon any discussion pertaining to moral misconduct as that is not the issue in the case at hand. The decision in Fiza Developers and Inter-Trade Private Limited (supra) has been rendered by this Court while interpreting Section 34 of the 1996 Act. The context being different, we are not inclined to apply the principles enumerated therein to the objection filed under Sections 30 and 33 of the 1940 Act, for the simon pure reason that the authorities are plenty to make it limpid that the issue of legal misconduct on the part of the arbitrator should be manifestly discernable from the record