2019 (1) TMI 1371 - HC - Indian Laws

Arbitral award - scope of the arbitral reference - whether or not GMB s claim before the learned Arbitrators/learned Umpire was restricted to ₹ 2 crores? - Held that - It is not in dispute that there was no specific reference of disputes by either of the parties when they nominated their respective Arbitrators. In other words, specific heads and amounts claimed under each head were not enumerated in the letters whereby Arbitrators were nominated. Hence, in our opinion, the learned Umpire rightly held that the disputes that formed the subject matter of the reference would have to be gathered from the pre-reference correspondence exchanged by and between the parties. It is trite law that so long as the meaning given by an Arbitrator/Umpire to a document or a series of documents is a plausible one, the Court will not interfere and substitute such meaning with its own understanding of such documents even if the Court differs from the Arbitrator or Umpire. The Court in exercise of an application under Secs. 30 and 33 of the Arbitration Act, 1940 does not act as an Appellate Court - there was no reason for the learned Judge to restrict the award under Schedule E to ₹ 37,34,090/- while in principle upholding the learned Umpire s award of ₹ 346.45 lacs on that count. There are no justification in the learned Judge disallowing the learned Umpire s award of ₹ 203.43 lacs on account of damages for preventing GMB to use the logo GMB-Neycer - A Court hearing an application for setting aside an arbitral award does not have the power to reappraise the evidence before the Arbitrator/Umpire. So long as there is some evidence on the basis of which an award has been made, the Court shall not go in the sufficiency or otherwise of such evidence. The impugned judgment and order is set aside to the extent it interferes with the award of the Ld. Umpire. The Ld. Umpire s award is upheld - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Scope of the arbitral reference.
2. Validity of the arbitral award exceeding ?2 crores.
3. Assessment of damages and specific claims under various schedules.
4. Jurisdiction and interpretation of the Arbitrator/Umpire.
5. Grounds for setting aside the arbitral award.

Detailed Analysis:

1. Scope of the Arbitral Reference:
The primary issue was whether GMB’s claim before the Arbitrator/Umpire was restricted to ?2 crores. The Umpire held that the scope of the reference was not limited to time overrun claims of ?2 crores and included all disputes and claims as pleaded in the statement of claim. The Umpire analyzed pre-reference correspondence and concluded that all disputes were referred to arbitration, including claims beyond ?2 crores. The Single Judge disagreed, holding that GMB’s claim was restricted to ?2 crores based on the letter dated 19 October 1989. However, the Court found that the scope of reference was not limited to ?2 crores and included all disputes, setting aside the Single Judge’s finding.

2. Validity of the Arbitral Award Exceeding ?2 Crores:
GMB contended that the learned Single Judge erred in setting aside the portion of the arbitral award exceeding ?2 crores. The Court held that the Umpire's interpretation of the correspondence was plausible, and the scope of reference was not restricted to ?2 crores. Hence, the award of ?346.45 lakhs under Schedule E and ?203.43 lakhs for preventing GMB from using the logo GMB-Neycer was upheld.

3. Assessment of Damages and Specific Claims:
The claims made by GMB were on six counts as indicated in Schedules A to F. The Umpire awarded various amounts under each schedule, which were partially upheld and partially set aside by the Single Judge. The Court upheld the Umpire’s awards for damages for delay in commissioning (?39.15 lakhs), damages for Neycer’s failure to set up sales personnel recruitment and dealer’s network (?123.61 lakhs), and damages for loss of profit due to delay in achieving optimum production (?346.45 lakhs). The award for preventing GMB from using the logo (?203.43 lakhs) was also upheld.

4. Jurisdiction and Interpretation of the Arbitrator/Umpire:
The Court emphasized that an Arbitrator’s function is to arbitrate in terms of the contract and cannot act outside the contract. The Umpire’s interpretation of the correspondence and the scope of reference was found to be reasonable and within jurisdiction. The Umpire’s decision was based on evidence and was not arbitrary or capricious.

5. Grounds for Setting Aside the Arbitral Award:
The Court reiterated the limited grounds under Sections 30 and 33 of the Arbitration Act, 1940, for setting aside an arbitral award. The award can only be set aside if the Arbitrator/Umpire has misconducted himself, the award is improperly procured, or is otherwise invalid. The Court found no evidence of misconduct or invalidity in the Umpire’s award. The Umpire’s award was based on evidence, and the Court refrained from reappraising the evidence.

Conclusion:
The Court set aside the judgment of the Single Judge to the extent it interfered with the Umpire’s award. The Umpire’s award was upheld in its entirety, and Neycer’s appeal was dismissed. The claims and disputes raised by GMB were found to be within the scope of the arbitral reference, and the Umpire’s interpretation of the correspondence and claims was deemed reasonable and within jurisdiction. The Court emphasized the limited grounds for setting aside an arbitral award and upheld the Umpire’s findings based on evidence.

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