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TMI Blog2023 (5) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the District Court under Section 34 of the Act - Appeal dismissed. - C.M.A.(MD)No.834 of 2011 - - - Dated:- 10-10-2022 - J. NISHA BANU AND N. ANAND VENKATESH, JJ. For Appellant: N. Dilip Kumar For Respondents : V. Meenakshi Sundaram JUDGMENT This appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (herein after referred to as the Act ) against the order passed by the learned Principal District Judge, Thoothukudi in A.O.P. No. 127 of 2006, dated 04.08.2010, under Section 34 of the Act, dismissing the petition filed by the appellant challenging the Award passed by the Arbitrator on 16.03.2006. 2. The brief facts of the case are that the appellant was appointed as the Handling Agent for the 1st respondent Company for export of wheat from Thoothukudi Port through an Agreement dated 01.12.2000. Under the agreement, the appellant was appointed to work as Cargo Handling Agent for the 1st respondent as per the terms and conditions of the Agreement. The further case of the appellant is that under the Agreement, the appellant was expected to receive wheat on behalf of the 1st respondent from FCI godown at Thoothukudi and transport i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing effect: (a) The Arbitration O.P. No. 127 of 2006 shall stand adjourned for a period of 3 months with effect from the date of receipt of a copy of this order. (b) It is now open to the Arbitrator (second respondent) either to resume the proceedings or to take such other action, as in his considered opinion would eliminate the grounds raised for setting aside the award. Since the discretion is entirely left to the second respondent, it is open to him to form an opinion as to whether such an exercise would be undertaken by him at all and if so, the extent to which and the manner in which the exercise would be undertaken by him. In case, the Arbitrator chooses to resume the proceedings, he shall issue notice to both parties, fix a date for hearing and proceed further. (c) The Arbitrator is requested to communicate his decision, within a period of 3 months to the Principal District Court, Tuticorin as well as to the parties, to enable the Court below to proceed further with Arbitration O.P. No. 127 of 2006, if necessary. (d) It is made clear that the finding recorded both by the District Court and by this Court that there exist grounds for setting aside the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to the Principle of Quantum Meruit. 11. The learned counsel for the appellant while dealing with the findings of the District Court, contended that the learned District Judge failed to appreciate the fact that there was a perverse finding by the Arbitrator and hence it fell within the parameters under Section 34 of the Act for interfering with the Award. Therefore, according to the learned counsel for the appellant, the order passed by the District Judge warrants the interference of this Court and that the appellant is entitled for the relief sought for. 12. The learned counsel for the appellant in order to substantiate his submissions relied upon the following judgments: (a) State of West Bengal vs. M/s. B.K. Mondal and Sons reported in AIR 1962 SC 779. (b) V.R. Subramanyam vs. B. Thayappa and others reported in AIR 966 SC 1034. (c) State of Uttar Pradesh vs. Chandra Gupta Co. reported in AIR 977 All 28. (d) Food Corporation of India and Others vs. Vikas Majdoor Kamdar Sahkari Mandli Limited reported in 2007 13 SCC 544. (e) Venkatesh Construction Company vs. Karnataka Vidyuth Karkhane Limited reported in 2016 4 SCC 119. (f) Mahan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Arbitrator considering the scope of Section 34 of the Act and hence, there is no ground to interfere with the order passed by the District Judge in this Appeal and the same is liable to be dismissed by this Court. 15. The learned counsel for the 1st respondent in order to substantiate his submissions, relied upon the following judgments: (a) Project Director, National Highways No. 45 E and 220 National Highways Authority of India vs. M. Hakeem and another reported in 2021 9 SCC 1 (b) Welspun Specialty Solutions Limited vs. Oil and Natural Gas Corporation Limited reported in 2022 2 SCC 382 16. This Court has carefully considered the submissions made on either side and also the materials available on record. 17. At the outset, this Court must keep in mind the scope of an appeal under Section 37 of the Act and thereafter, deal with the submissions made on either side. It will be more beneficial to take note of two recent judgments of the Apex Court in this regard. 18. The Apex Court in UHL Power Company Limited vs. State of Himachal Pradesh reported in 2022 4 SCC 116 has held as follows: 16. As it is, the jurisdiction conferred on Courts under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence will be justified only in cases of commission of misconduct by the arbitrator which can find manifestation in different forms including exercise of legal perversity by the arbitrator. 18. It has also been held time and again by this Court that if there are two plausible interpretations of the terms and conditions of the contract, then no fault can be found, if the learned Arbitrator proceeds to accept one interpretation as against the other. In Dyna Technologies (P) Ltd. V. Crompton Greaves Ltd., the limitations on the Court while exercising powers under Section 34 of the Arbitration Act has been highlighted thus: 24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act. 21. An identical line of reasoning has been adopted in South East Asia Marine Engg. Constructions Ltd.[SEAMAC Limited] V. Oil India Ltd. and it has been held as follows: 12. It is a settled position that a court can set aside the award only on the grounds as provided in the Arbitration Act as interpreted by the courts. Recently, this Court in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1] laid down the scope of such interference. This Court observed as follows: (SCC pp. 11-12, para 24) 24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed by the High Court is hence not sustainable. 20. 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. To put it lightly, Section 34 of the Act acts as a pigeon hole where only a sparrow can enter and when it comes to Section 37 of the Act, probably only an ant can enter. For even ants would not rush in where sparrows fear to tread. 21. 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. This Court must keep in mind the caution expressed by the Apex Court in Mc Dermott International Inc., vs. Burn Standard Co. Ltd., and Others reported in 2006 11 SCC 181, wherein it has been held that the supervisory role of the Court in arbitration proceedings has been kep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or made by any parties on MMTC. 2.5 It shall be the responsibility of the HANDLING AGENT to make all arrangements like procuring adequate labour and other necessary equipments required for lifting the stock from the FCI depots. 2.6 The HANDLING AGENT shall be responsible for proper handling, for taking all precautions and security arrangements against loss or damage to the Goods. The HANDLING AGENT shall accept full responsibility for any act of theft, criminal mis-appropriation or breach of trust in respect of MMTC's Goods entrusted to the HANDLING AGENT. For non-delivery or short delivery of the consignments, MMTC shall reserve the right to impose penalty at the rates to be determined by it from time to time in addition to recovering the cost of the material. Such determination of penalty by MMTC shall be final and binding on the HANDLING AGENT. 2.7 It shall be the sole responsibility of the HANDLING AGENT to protect the consignment from damages during transportation, stocking and loading into the ship. The HANDLING AGENT shall maintain a proper account of quantity loaded from each FCI Depot. 2.8 At the time of shipment, the HANDLING AGENT shall arrange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnated office(s) 6. RATES 6.1 The Rates payable by MMTC to the HANDLING AGENT under various heads shall be consolidated amount of Rs. 327.25 per Mt. details of work to be covered are listed in the enclosed Annexure-1 and the consolidated rate will be constant and will not be prone to escalation or de-escalation irrespective of the fact whether item of work becomes necessary or otherwise for the efficient performance of the work assigned to the Handling Agent. All statutory levies like all cesses, wharfage, dues, etc., shall be borne by MMTC. 6.2 The HANDLING AGENT shall bear charges for opening of bags and bulking of goods on the wharf/vessel in the even of FOB/C F bulk shipment. 6.3 The HANDLING AGENT shall bear all the expenses including labour charges for refilling the bags with sound Goods recovered from spillage and shifting of same to warehouse wharf/port The HANDLING AGENT shall maintain a separate record for such retrieved Goods. 6.4 The HANDLING AGENT shall be responsible to provide the facility of transit shed at their cost and expense 6.5 In case of demurrage and/or extra wharlage due to non-achievement of the guaranteed rate of loading, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 Organising private labour to un-sling, cut open, dump and trim the cargo inside the hatches. Rs.11/- 17 Collect sweepings Rs.3/- 18 Clean sweepings, bag sweepings, sling them and load on to hatch to reduce wastage Rs.4/- 19 Organise tally clerks on board and at shore. Rs.5/- 20 Organise and co-ordinate Phythosanitary Inspection and certification Rs.3/- 21 Organise fumigation and certification. Rs.10/- 22 Organise berthing of vessel with guaranteed immediate berthing. Any loss of time due to delayed berthing to the account of CFA 23 Responsibility to organise additional shore gears to achieve the desired loading rate of 3500 MTS Rs.5/- 24 All miscellaneous expenses to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rangements to bring back the goods rejected by the Surveyor to the godown belonging to MMTC. In short, the appellant has been saddled with the responsibility right from unloading from the FCI godown till the loading of the goods at the Thoothukudi port. The issue of storage of the goods, for whatever period, falls well within this process. The appellant claims that it is an additional work beyond the scope of the contract and hence is entitled for reimbursement of storage charges. Whereas, the 1st respondent claims that the payment of storage charges is beyond the scope of the Agreement and it is the responsibility of the appellant and consequently, the appellant is not entitled to be compensated towards storage charges/godown rent. 25. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will be entitled for restitution of the storage charges. 28. Even after the matter was remitted back to the file of the Arbitrator, the learned Arbitrator took into consideration the communication made through Fax, dated 06.02.2001 by the Manager of the 1st respondent Company and the claim made by the appellant to the effect that the storage charges were reimbursed by the other branches of the 1st respondent Company. The Arbitrator rendered a finding that the Manager of the 1st respondent Company cannot alter the terms of the Agreement by expressing his personal view. It was further held that there is no justification on the part of the appellant to claim for storage charges for the godown beyond thirty days and such a claim is beyond the terms of the Agreement and hence, the Arbitrator cannot grant compensation beyond the terms of the Agreement. The Arbitrator has further held that the alleged payment made from 08.02.2001 to 04.04.2001 for a sum of Rs. 3,35,360/- as godown charges, was not made to the appellant, but it was paid as a special arrangement for hiring the godown space to PSTS Heavy Equipment and Sri Krishna Trading Corporation Limited and such temporary arrangemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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