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TMI Blog2005 (4) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... breach of condition by BOL. Keeping that fact in view, payment was not made by HCL and it could not have been held that HCL was wrong in not making payment. BOL, in view of breach of condition could not have asked for payment. The Arbitrator, therefore, was wrong in allowing the claim of BOL. In view of waiver on the part of HCL, it was incumbent on HCL to make payment and since no such payment was made, BOL was right in making grievance regarding non-payment of the amount and accordingly an award was made in favour of BOL. The learned single Judge as well as the Division Bench of the High Court considered the grievance of HCL so far as the claim of BOL allowed by the Arbitrator and upheld it. In view of the finding recorded by the Arbitrator and non-interference by the High Court, we are of the view that no case has been made out by HCL as regards the claim allowed by the Arbitrator in favour of BOL to the extent of supply of oxygen gas to HCL. Hence, the appeal filed by HCL deserves to be dismissed. In our opinion, however, the learned counsel for BOL is justified in submitting that really it was in realm of appreciation and re-appreciation of evidence. At the most all those lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be no order as to costs. - HON'BLE RUMA PAL AND C.K. THAKKER, JJ. For the Appellant : P.K. Ghosh, Sr. Adv., A. Dutta and Praveen Swarup, Advs For the Respondent : D.A. Roy Chaudhary, Nandani Mukherjee and Deba Prasad Mukherjee, Advs. JUDGMENT: C.K. Thakker, J. 1. Leave granted. 2. All these appeals arise out of common judgment and order passed by the Division Bench of the High Court of Calcutta in APOT Nos. 721 of 2002 and 736 of 2002 on July 03, 2003 by which the Division Bench confirmed the order passed by learned single Judge on July 24, 2002 in A.P. No. 369 of 2002. That A.P. was filed by Hindustan Copper Limited against Arbitration award passed by Justice L.M. Ghosh (Retd.) on September 25, 2000, under the Arbitration Act, 1940 (hereinafter referred to as the Act ). 3. To appreciate the controversy raised in the present appeals, relevant facts may be stated in brief. On March 10, 1988, Hindustan Copper Limited ( HCL for short) invited tender for supply of oxygen for its plant at Ghatsila. The tender contained a condition that successful bidder will set up an oxygen plant in the vicinity of HCL. The tender of Bhagwati Oxygen Limited ( BOL for short) was accepted and an ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered from BOL forthwith. However, HCL will give adequate chance to BOL to meet the HCL s requirements by their own means from other sources at the contract price. 10.5. In case, for any period the quantity of Gas supplied goes down below the guaranteed purity or pressure, no payment will be made for that period or quantity unless specifically prior acceptance is obtained from HCL. 5. A security deposit of ₹ 20 lacs (Rupees twenty lacs only) had been made by BOL to HCL in the form of bank guarantee issued by the Central Bank of India, New Delhi. There was an arbitration clause being Clause No.12. The said clause reads thus: Except where it has been provided otherwise, any dispute or difference arising out of or in connection with the work or any operation covered by the contract and any dispute or difference arising out of in connection with the agreement entered into between HCL and BOL including any dispute or difference relating to the interpretation of the agreement or any clause thereof, shall be referred to sole arbitration of a person appointed jointly by the Chairman of HCL and BOL. The provisions of the Arbitration Act, 1940 and the rules thereunder and any amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest at the rate of eighteen per cent per annum for pre-reference period, pendente lite and from the date of award till the date of payment. According to the Arbitrator, BOL was also entitled to an amount of ₹ 1,50,000 (One lakh and fifty thousand only) on account of costs. 9. The award was challenged by HCL by filing A.P. No. 369 of 2000 under Sections 30 and 33 of the Act. A prayer was made to set aside the award. It was contended that the Arbitrator had misconducted himself and the proceedings. It was also contended that the Arbitrator had exceeded his jurisdiction and decided the questions not covered by Clause 12 of the Arbitration agreement and hence, the award was invalid. It was argued that the Arbitrator ought not to have allowed the claim of BOL nor could have dismissed the counter claim of HCL. Since there was breach of contract by BOL, it was not entitled to any amount. On the other hand, in view of noncompliance with the terms and conditions of the contract and breach of agreement, BOL was liable to pay and HCL was entitled to the amount claimed in the counter claim. It was also urged that the Arbitrator had no jurisdiction and had committed an error of law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntirety and ought to have dismissed the claim of BOL by allowing counter claim of HCL. The complaint of BOL, on the other hand, was that the learned single Judge ought to have dismissed the counter claim and should not have interfered with the rate of interest granted by the Arbitrator in favour of BOL. In short, the learned single Judge ought to have dismissed the application of HCL. 13. The Division Bench considered the rival contentions of the parties and dismissed both the appeals confirming the order passed by the learned single Judge. The Division Bench observed that by confirming the claim of BOL, the learned single Judge did not commit any error of law. Similarly, the learned single Judge was also right in upholding the argument of HCL that the Arbitrator was wrong in dismissing the counter claim and he had not considered several communications to BOL. The order of the learned single Judge thus did not call for interference. Regarding rate of interest, the Division Bench was of the view that learned single Judge was right in observing that Section 61 of Sale of Goods Act did not provide the rate of interest. It was also true that there was no indication in the contract as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be dismissed and appeal filed by BOL deserves to be allowed. 17. The learned counsel for HCL, on the other hand, supported the orders passed by the learned single Judge and the Division Bench so far as they relate to remanding the matter to Arbitrator for deciding afresh the counter claim of HCL. Regarding payment of interest at the rate of six per cent per annum to BOL, it was submitted that even that part of the order was not warranted and the claim of BOL was liable to be rejected. The Arbitrator committed an error of law and has misconducted himself as well as proceedings in allowing such claim. According to the learned counsel, there was breach of contract on the part of BOL, oxygen was not supplied as per the agreement entered into between the parties; purity of oxygen was not maintained; other terms and conditions were also not fulfilled by BOL and as such, BOL was not entitled to any relief. It was, therefore, prayed that the award passed by the Arbitrator deserves to be quashed in its entirety by allowing the appeal of HCL. 18. In the light of rival contentions of the parties, in our opinion, three questions arise for our consideration : (1) Whether on the facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of liquid oxygen of 50,000 litres. It was not disputed that VIST was not established by BOL and there was no provision for storage of liquid oxygen. He, however, observed that HCL neither insisted for establishing VIST nor objected for not establishing it. 21. Regarding purity of oxygen, the Arbitrator observed that HCL never complained regarding the fall of purity of oxygen during the relevant period. Referring to the letters written by HCL to BOL, the Arbitrator observed that HCL continued to accept oxygen gas supplied by BOL without avoiding the contract on the ground that there was breach of agreement by BOL. The Arbitrator observed that there was neither excess consumption of furnace oil nor drop in production by HCL. Referring to the decisions of this Court in Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh, [1968] 2 SCR 545 and Brijendra Nath Bhargava and Anr. v. Harsh Vardhan and Ors., [1988] 1 SCC 454, the Arbitrator held that even if it was the case of HCL that there was non-compliance of certain terms and conditions by BOL, there was waiver and abandonment of the rights conferred on HCL and it was not open to HCL to refuse to make payment to BOL on that gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the court, other view is equally possible. It is only when the court is satisfied that the Arbitrator had misconducted himself or the proceedings or the award had been improperly procured or is otherwise invalid that the court may set aside such award. 26. In the leading decision of Hodgkinson v. Fernie, (1857) 140 ER 712, Williams, J. stated; The law has for many years been settled, and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact. Many cases have fully established that position, where awards have been attempted to be set aside on the ground of the admission of an incompetent witness or the rejection of a competent one. The court has invariably met those applications by saying, You have constituted your own tribunal; you are bound by its decision. (emphasis supplied) 27. In Union of India v. Rallia Ram, AIR (1963) SC 1685, this Court said; An award being a decision of an arbitrator whether a lawyer or a layman chosen by the parties, and entrusted with power to decide a dispute submitted to him is ordinarily n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or instance, by deciding on evidence which was not admissible, or on principles of construction which the law does not countenance, there is error in law which may be ground for setting aside the award. 29. In Rajasthan State Mines Minerals Ltd. v. Eastern Engineering Enterprises and Anr., [1999] 9 SCC 283, this Court after considering several decisions on the point, held that if an Arbitrator has acted arbitrarily, irrationally, capriciously or beyond the terms of the agreement, an award passed by him can be set aside. In such cases, the Arbitrator can be said to have acted beyond the jurisdiction conferred on him. 30. In U.P. State Electricity Board v. Searsole Chemcials Ltd., [2001] 3 SCC 397, this Court held that where the Arbitrator had applied his mind to the pleadings, considered the evidence adduced before him and passed an award, the court could not interfere by reappraising the matter as if it were an appeal. 31. In Indu Engineering Textiles Ltd. v. Delhi Development Authority, [2001] 5 SCC 691, it was observed that an Arbitrator is a Judge appointed by the parties and as such the award passed by him is not to be lightly interfered with. 32. In Bharat Coking Coal Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, however, the learned counsel for BOL is justified in submitting that really it was in realm of appreciation and re-appreciation of evidence. At the most all those letters go to show that HCL had some complaint against BOL and it had also disclosed its intention to purchase oxygen gas from other sources but as observed by the Arbitrator, it was not proved that HCL had in fact purchased oxygen from other sources under Clause 10.4. If in the light of such evidence, the Arbitrator did not think it fit to allow counter claim, it could not be said to a case of misconduct covered by Section 30 of the Act. The learned single Judge as also the Division Bench were, therefore, not justified in setting aside the award passed by the Arbitrator dismissing the counter-claim and hence the order of the learned single Judge as confirmed by the Division Bench deserves to be set aside by restoring dismissal of counter-claim of HCL by the Arbitrator. 36. The last question relates to payment of interest. The Arbitrator awarded interest to BOL at the universal rate of eighteen per cent for all the three stages, pre-reference period, pendente lite and post award period. It is not disputed that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the principle of Section 34, Civil Procedure Code and there is no reason or principle to hold otherwise in the case of arbitrator. (ii) An arbitrator is an alternative forum for resolution of disputes arising between the parties. If so, he must have the power to decide all the disputes or differences arising between the parties. If the arbitrator has no power to award interest pendente lite, the party claiming it would have to approach the court for that purpose, even though he may have obtained satisfaction in respect of other claims from the arbitrator. This would lead to multiplicity of proceedings. (iii) An arbitrator is the creature of an agreement. It is open to the parties to confer upon him such powers and prescribe such procedure for him to follow, as they think fit, so long as they are not opposed to law. (The proviso to section 41 and Section 3 of Arbitration Act illustrate this point). The arbitrator must also act and make his award in accordance with the general ..... X X X X Extracts X X X X X X X X Extracts X X X X
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