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2023 (5) TMI 322 - HC - Indian LawsValidity of Arbitral Award - activity of providing storage godowns to store goods - appellant contended that the Arbitrator after having held that the claim for rental charges is outside the scope of the Agreement, ought to have invoked Section 70 of the Contract Act and ordered for compensation of the appellant for the rental/storage charges - HELD THAT - The extent of judicial scrutiny under Section 34 of the Act is limited and the scope of interference is narrow. Under Section 37 of the Act, the extent of judicial scrutiny and scope of interference is further narrowed down - An appeal under Section 37 is more or less akin to a second appeal, the first appeal being to the Court by way of objections under Section 34 of the Act. Where there are concurrent findings of facts and law, the Appellate Court would be very cautious and reluctant to interfere into the findings returned in the Award by the Arbitral Tribunal and confirmed by the Court under Section 34 of the Act. The consolidated rate as fixed under the Annexure will not be subject to any escalation and considering the Clauses in the Agreement, there is no scope for the claimant to make any new claim under any head for whatsoever reason. This finding was rendered by the Arbitrator by taking into consideration Clause 2 and Clause 6 of the Agreement. On carefully going through the same, the appellant has been given the absolute responsibility to take delivery of the goods from the nominated godowns of FCI, arrange for the transportation of the goods after weighment, ensure the safety of the goods and accept full responsibility in respect of the goods and indemnify the 1st respondent for any loss or damages to the goods, to protect the consignment from damages during transportation, stocking and loading into the ship at the port, to arrange for the temporary storage of the goods in godown at port before loading into the vessel and to make all arrangements to bring back the goods rejected by the Surveyor to the godown belonging to MMTC. The Arbitrator while dealing with this issue has held that the storage in godown before the goods are loaded in the port, is the responsibility of the appellant and it cannot be called as an additional work as claimed by the appellant. The Arbitrator has also taken into consideration Clause 6 which deals with the rates fixed and payable by the 1st respondent. This Clause makes it clear that there shall be no escalation of the consolidated rates agreed for whatsoever reason. The Arbitrator also took into consideration, the Annexure to the Agreement which provides for item wise rates fixed. The Arbitrator has come to a conclusion that there were deliberations between the parties before the rates were fixed and that is the reason why Clauses 2.15, 6.1 and 6.8 were incorporated in the Agreement and hence, there is no scope for the appellant to claim compensation beyond what has been fixed under the Agreement. The Arbitrator has given a finding to the effect that the claim made by the appellant goes beyond the scope of the Agreement. This finding cannot be read in isolation and it must be read along with the other reasonings given by the Arbitrator - The learned counsel for the appellant was not right in interpreting the same as if the storage charges fell beyond the scope of the Agreement and hence, Section 70 of the Contract Act will apply and consequently, the appellant will be entitled for restitution of the storage charges. In the considered view of this Court, while exercising the jurisdiction under Section 37 of the Act, this Court is only expected to see if the finding rendered by the Arbitrator and as confirmed by the District Judge under Section 34 of the Act, is a possible and plausible interpretation of the terms of Agreement. This Court holds that the terms of the contract has been construed in a reasonable manner and the Award passes muster. Just because an alternative view on facts and interpretation of contract exists, that can never be a ground for interfering with an Award - there is no need for this Court to go into the other issue pertaining to the applicability of Section 70 of the Contract Act. This issue will arise for consideration only if this Court holds that the appellant has done extra work/additional work which is not founded in the Agreement. Hence, the interpretation given to Section 70 of the Contract Act qua the Principle of Quantum Meruit by the Arbitrator, does not require a finding in this appeal. This Court does not find any ground to interfere with the Award passed by the Arbitrator and as confirmed by the District Court under Section 34 of the Act - Appeal dismissed.
Issues Involved:
1. Scope of the Arbitration and Conciliation Act, 1996, specifically Sections 34 and 37. 2. Interpretation of the Cargo Handling Agreement, including Clauses 2, 6, and the Annexure. 3. Applicability of Section 70 of the Indian Contract Act. 4. Judicial scrutiny and scope of interference under Sections 34 and 37 of the Arbitration and Conciliation Act. Detailed Analysis: 1. Scope of the Arbitration and Conciliation Act, 1996: The appeal was filed under Section 37 of the Arbitration and Conciliation Act, 1996, challenging the order of the Principal District Judge dismissing the petition under Section 34 of the Act. The court emphasized the limited jurisdiction under Sections 34 and 37, citing precedents that restrict interference to cases of "patent illegality" or violations of the "public policy of India." The court reiterated that it does not sit in appeal over the arbitral award and interference is justified only in cases of "legal perversity." 2. Interpretation of the Cargo Handling Agreement: The appellant argued that the storage of goods was not contemplated under the agreement and thus constituted additional work. Clauses 2, 6, and the Annexure were scrutinized to determine the responsibilities and rates agreed upon. The court noted that the appellant was responsible for the entire process from unloading at the FCI godown to loading at the port, including temporary storage. The Arbitrator concluded that the storage responsibility fell within the agreement, and any additional charges claimed were beyond the scope of the agreement. The court upheld this interpretation, finding it reasonable and supported by the contract's terms. 3. Applicability of Section 70 of the Indian Contract Act: The appellant contended that Section 70 of the Indian Contract Act, which embodies the principle of restitution and prevention of unjust enrichment, should apply since the storage was additional work. The Arbitrator had found that the claim for storage charges was within the agreement and thus Section 70 did not apply. The court agreed, stating that the interpretation by the Arbitrator was plausible and supported by the contract, and hence did not require interference. 4. Judicial Scrutiny and Scope of Interference: The court emphasized the narrow scope of judicial scrutiny under Sections 34 and 37, citing multiple Supreme Court judgments. It highlighted that an appeal under Section 37 is akin to a second appeal and should be approached with caution, respecting the finality of the arbitral award. The court found that the Arbitrator's interpretation of the contract was reasonable and that the findings were supported by sound reasons. Consequently, the court dismissed the appeal, affirming the Arbitrator's award and the District Court's order under Section 34. Conclusion: The court dismissed the appeal, finding no grounds to interfere with the Arbitrator's award or the District Court's order under Section 34. The interpretation of the Cargo Handling Agreement by the Arbitrator was deemed reasonable, and Section 70 of the Indian Contract Act was found inapplicable. The court reiterated the limited scope of judicial interference under Sections 34 and 37, emphasizing the need to respect the finality of arbitral awards.
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