1989 (3) TMI 375 - SC - Indian Laws

Summary

Issues Involved:
1. Appointment and award of the arbitrator.
2. Claim of penalty for non-lifting of paddy.
3. Cost of non-delivery of rice.
4. Jurisdiction and grounds for setting aside the arbitrator's award.

Issue-wise Detailed Analysis:

1. Appointment and Award of the Arbitrator:
The dispute arose from a contract dated 15th May, 1979, where the appellant was to provide paddy to the respondent for conversion into rice. The Subordinate Judge, First Class, appointed an arbitrator on 17th March, 1980, upon the respondent's application. The arbitrator gave his award on 22nd January, 1982, which did not fully favor the appellant. The respondent filed an application under section 14 of the Arbitration Act, 1948, to make the award the rule of the court. The appellant filed objections under sections 30 and 33 of the Act. The Subordinate Judge initially modified the award in favor of the appellant, but the Additional District Judge reversed this decision, which was upheld by the High Court.

2. Claim of Penalty for Non-Lifting of Paddy:
The arbitrator addressed a claim of Rs. 55,060.29 as a penalty for not lifting the balance of the paddy. The arbitrator justified the millers' (respondents) actions and noted that even if the millers were at fault, the appellant could not recover the penalty without showing actual losses. The arbitrator emphasized that no evidence of actual losses was provided by the appellant, thus dismissing the claim for penalty.

3. Cost of Non-Delivery of Rice:
The appellant claimed Rs. 3,23,856.08 for the cost of non-delivery of 137.39549 tonnes of rice. The arbitrator examined clause g(i) of the contract, which stipulated a penal rate of 1.5 times the economic cost for short-supplied rice. The arbitrator found no definition of "Economic Cost" in the contract or law, and based on the evidence, determined the maximum price should be Rs. 100 per quintal, excluding additional charges. Consequently, the arbitrator allowed Rs. 1,96,277.00 for the undelivered rice, noting that the rice quality was accepted under the Punjab Rice Procurement Price Control Order, 1968.

4. Jurisdiction and Grounds for Setting Aside the Arbitrator's Award:
The court emphasized that the jurisdiction to interfere with an arbitrator's award is limited to cases of misconduct or errors apparent on the face of the award. The arbitrator's decision must adhere to justice, equity, law, and fair play. The court found that the arbitrator's award was a plausible construction of clause g(i) of the contract and did not demonstrate any misconduct or error of law. The court reiterated that it cannot re-examine the merits of the award or sit in appeal over the arbitrator's decision. The learned Additional District Judge's correction of the Subordinate Judge's order was justified, and the High Court's decision to dismiss the revision was upheld.

Conclusion:
The appeal was dismissed, affirming the arbitrator's award and the decisions of the Additional District Judge and the High Court. The court underscored the limited grounds for setting aside an arbitrator's award and the importance of upholding arbitration as a mode of dispute resolution. No order as to costs was made.