1971 (1) TMI 110 - SC - Indian Laws

Whether a contract or a clause of it is incorporated in the award is a question of construction of the award Whether 547 vehicles said to have been sold to the company under sale -note 197 dated August 2, /6 1946? Whether 600 vehicles which had been taken out of Moran Depot for operational purposes were part of the sale under sale-note 160? Whether the amount of such rent was fixed by the umpire without any evidence? Whether the amount of costs awarded by the umpire to the respondents was disproportionate? Held that - This is not a case where the umpire in the words of Lord Dunedin tied himself down to a legal proposition which on the face of the award was unsound. The award makes it clear in so many words that he took into account the entire evidence including the documents relied on by counsel and then only came to the conclusion that it did not assist the company in its contention as to the scope of the sales. Once it is found that he was competent to decide the dispute as to whether the said 547 vehicles were not the subject-matter of the sale and 291 of them were removed unauthorisedly he must to do justice between the parties in respect of disputes referred to him order the company either to return them or to pay compensation for them. Since the first course was not possible after all these years the second was the only and the obvious course. The dispute raised by the respondents that 291 vehicles were not included in the sale was co-extensive with and connected with the dispute that the company was bound to return them if it was found that they were not covered by the sale. On this reasoning it is not possible to say that the umpire went beyond his jurisdiction either in rejecting the company s claim No. VI or in accepting the corresponding counter-claim No. VI of the respondents. Having held that sale-note 160 covered only those vehicles which were actually lying in Moran Depot on July 10 1946 it was not incumbent on the umpire to decide the number of operational vehicles outside the depot. Consequently if he was satisfied that even though the company was not entitled to the said 600 vehicles claimed by it yet the authorities had delivered a substantial number of them and for any deficiency had also delivered non-operational vehicles there would be no purpose in going into the details of vehicles delivered to the company. Even though as the judgment of the Trial Court discloses (para 223) there was evidence both oral and documentary that the company had collected a number of vehicles lying at places outside the Depot and the vehicles so collected were recorded by the company yet the company had withheld the production of those records. In view of these facts it is impossible to say that the umpire had acted without evidence or that he behaved in the manner of a conciliator or gave findings on conjectures and surmises. Under the contracts of sale the company was bound to pay to the Government ground rent and other charges which the Government in its turn was liable to pay. It is therefore not correct to say that the umpire could award only that amount which the Government had actually paid and that the umpire should therefore have taken an account from the Government. It was never the case of the company that the Government had claimed ground rent higher than the compensation it was liable to pay. It appears from the award-that the umpire fixed the amount of costs after considering the statements of expenses incurred by the parties for the hearing before him tendered by the respective counsel for the parties. Considering the huge amounts claimed by the parties the volume of evidence both oral and documentary adduced by them the number of days occupied in recording that evidence and in arguing the case we are not prepared to say that the discretion which the umpire exercised in the matter of costs was exercised in breach of any legal provision or unreasonably which can justify the Court s intervention. Appeal dismissed

Summary

Issues Involved:
1. Misconstruction of the contracts of sale by the umpire.
2. Failure to consider relevant documents by the umpire and High Court.
3. Umpire acting beyond jurisdiction regarding certain claims.
4. Umpire acting as a conciliator and relying on conjectures.
5. Lack of evidence for ground rent conclusions.
6. Disproportionate costs awarded to the Government.

Detailed Analysis:

1. Misconstruction of the Contracts of Sale by the Umpire:
The appellant company argued that the umpire misconstrued the contracts of sale, which was apparent on the face of the award. The umpire considered only the sale-notes and disregarded the correspondence between the company and the Director-General, Disposals. The court noted that the umpire had considered both the sale-notes and the oral and documentary evidence. The umpire concluded that the vehicles sold were only those lying in the Moran Depot on the specified dates, rejecting the company's broader interpretation. The court upheld the umpire's findings, stating that the umpire's decision on matters of fact and law was binding unless a legal error was apparent on the face of the award, which was not the case here.

2. Failure to Consider Relevant Documents:
The company claimed that the umpire and the High Court failed to consider several documents while deciding the scope of the sales. The court found that the umpire had indeed considered all relevant documents, including letters, correspondence, and meeting minutes, before concluding that the sale was limited to vehicles actually in the depots on the specified dates. The court dismissed this contention, affirming that the umpire had taken into account the entire evidence presented.

3. Umpire Acting Beyond Jurisdiction:
The company argued that the umpire acted beyond his jurisdiction regarding claim No. VI and counter-claim No. VI, as these did not fall within the scope of the reference. The court examined the arbitration clause, which covered disputes "arising under these conditions" or "in connection with this contract." The court concluded that the umpire had jurisdiction to decide whether the vehicles in question were part of the sale and to award compensation for unauthorized removal. The court held that the umpire's decision was within the scope of his jurisdiction.

4. Umpire Acting as a Conciliator:
The company contended that the umpire acted as a conciliator and based his award on conjectures and surmises, particularly regarding the 600 vehicles taken out of Moran Depot for operational purposes. The court found that the umpire had sufficient evidence to conclude that the company had been compensated for any deficiency by receiving non-operational vehicles. The court rejected the contention that the umpire acted without evidence or relied on conjectures.

5. Lack of Evidence for Ground Rent Conclusions:
The company argued that the umpire's conclusion on ground rent awarded to the Government was based on no evidence. The court noted that the company was contractually bound to pay ground rent and other charges that the Government was liable to pay under the Defence of India Rules. The court found no merit in the argument that the umpire should have taken an account from the Government, as it was never contended that the Government claimed higher ground rent than it was liable to pay.

6. Disproportionate Costs Awarded to the Government:
The company claimed that the costs awarded to the Government were disproportionate. The court observed that the umpire had fixed the costs after considering the statements of expenses incurred by both parties. Given the substantial claims, the volume of evidence, and the duration of the proceedings, the court found no unreasonable exercise of discretion by the umpire in awarding costs.

Conclusion:
The court dismissed the appeal, upholding the umpire's award and the judgments of the lower courts. The umpire's findings on the scope of the sales, his jurisdiction, and the costs awarded were all affirmed as being within the bounds of the arbitration agreement and supported by evidence. The appeal was dismissed with costs.