Arbitration Act, 1940: Arbitral award – Objections against – For the objector/appellant in order to succeed in their challenge against an arbitral award, they must show that the award of the arbitrator suffered from perversity or an error of law or that the arbitrator has otherwise misconducted himself – Merely showing that there is another reasonable interpretation or possible view on the basis of the material on the record is insufficient to allow for the interference by the Court.
Judicial review: Arbitral award – Held: Court does not sit in appeal over an award passed by an arbitrator. Dismissing the appeals, the Court
HELD : 1.1 This Court has consistently held that the Court does not sit in appeal over an award passed by an arbitrator. [Para 11][473-A-B]
Kwality Manufacturing Corporation v. Central Warehousing Corporation (2009) 5 SCC 142 – relied on.
1.2 It is also a settled proposition that where the arbitrator has taken a possible view, although a different view may be possible on the same evidence, the Court would not interfere with the award. [Para 12][473-E]
Arosan Enterprises Ltd. v. Union of India (1999) 9 SCC
449 : [1999] 2 Suppl. SCR 621 – relied on
2. For the objector/appellant in order to succeed in their challenge against an arbitral award, they must show that the award of the arbitrator suffered from perversity or an error of law or that the arbitrator has otherwise misconducted himself. Merely showing that there is another reasonable interpretation or possible view on the basis of the material on the record is insufficient to allow for the interference by the Court. [Para 13][474-C-D]
State of U.P. v. Allied Constructions (2003) 7 SCC 396 : [2003] 2 Suppl. SCR 55; Ravindra Kumar Gupta and Company v. Union of India (2010) 1 SCC 409 : [2009]
16 SCR 142; Oswal Woollen Mills Limited v. Oswal Agro Mills Limited (2018) 16 SCC 219 : [2018] 3 SCR 1062 – relied on.
3. In the facts at hand, it is an admitted fact that there was substantial delay attributable to the appellant in handing over the sites for the 68 B, C and D quarters to the respondent. The appellant has not contested this finding. With respect to the first issue, viz., on the issue of refund of rebate, the Arbitrator held that the rebate of 16% on the price of construction of 100 units of A and B quarters was given by the respondent on the condition that he would be able to execute both the works simultaneously. The Arbitrator interpreted the rebate as a conditional one on analysis of the documents on record, particularly the letter dated 14.06.1988 sent by the respondent to the appellant subsequent to the negotiations held between them, the award of both contracts to the respondent on the same date and the works programme (L-2) for both the works. The Arbitrator specifically highlighted that the appellant had not denied the L-2 programme, which indicated that both the works were to be carried out together. From a reading of the above material, the Arbitrator held that the intention of the parties was to complete the work together, which would have enabled the respondent to reduce its costs and optimizing its charges, thereby allowing it to grant the 16% rebate to the appellant. By delaying the handing over of the sites, the appellant had therefore breached the condition for the grant of rebate, entitling the respondent to a refund of the same. [Paras 15, 16][474-F-H; 475-A-C]
4. The appellant sought to canvas an alternate interpretation regarding the rebate on the basis of the letter dated 14.06.1988, stating that the same was granted merely for the awarding of both sets of contract to the respondent. While such an interpretation is possible, this is not sufficient to interfere with the award passed by the Arbitrator. As already highlighted, the Court does not sit as an appellate Court over the decision of an arbitrator, and cannot substitute its views for that of the Arbitrator as long as the Arbitrator had taken a possible view of the matter. In the present case, the Arbitrator has given clear reasoning for the possible view taken by him on the interpretation of the contract between the parties. As such, the Courts below rightly refused to interfere with the holding of the Arbitrator on the first issue. [Para 17] [475-C-E]
5. The second issue pertains to the grant of escalation charges for work done by the respondent beyond the scheduled period of the contract. The Arbitrator only allowed a part of the claim made by the respondent under this head. The Arbitrator took a view on the construction of the clauses of the contract that the firm price clause operated only with respect to the period for which the contract subsisted, and would not subsist beyond the scheduled period of the contract. The Arbitrator also noted that the appellant accepted the work undertaken by the respondent beyond the period of the contract without objections. The Arbitrator also carefully assessed the period of delay attributable to the appellant and awarded escalation to the respondent only for the same. With respect to the question of law as to whether the Arbitrator could order such an escalation, this Court has, in a catena of judgments, upheld the same. [Paras 18, 19][475-E-H; 476-A]
Assam State Electricity Board v. Buildworth Private Limited (2017) 8 SCC 146 : [2017] 7 SCR 123 – relied on.
New India Civil Erectors (P) Ltd. v. Oil & Natural Gas Corporation (1997) 11 SCC 75 : [ 1997] 2 SCR 86; State of Orissa v. Sudhakar Das (Dead) by Lrs (2000)
3 SCC 27 : [ 2000] 1 SCR 1136; General Manager, Northern Railway v. Sarvesh Chopra (2002) 4 SCC 45 : [2002] 2 SCR 156 – held inapplicable.
6. Any decision regarding the issue of whether an arbitrator can award a particular claim or not, will revolve on the construction of the contract in that case, the evidence placed before the arbitrator and other facts and circumstances of the case. No general principle can be evolved as to whether some claim can be granted or not. The appellant has neither been able to point out any error apparent on the face of the record, nor otherwise made out a case for interference with the award by the Arbitrator with respect to this issue. [Paras 25, 26][477-F-G; 478-A-B]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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