Full order THE HON’BLE MR. JUSTICE M.M.SUNDRESH AND THE HON’BLE Ms. JUSTICE R.N.MANJULA O.S.A.No.105 of 2020- .As regards the legality of the interference of the Court to the Award of the Arbitrator is concerned, the Courts have got limited scope to interfere with the reasons and findings given by the Arbitrator on the basis of interpreting the terms of the contract. Even if an another view of interpretation or understanding of the terms of the contract is possible, those views cannot be allowed to substitute the reasoned understanding and construction given by the learned Arbitrator, so long as those views of the Arbitrator are reasonable and based on the materials placed before him. In view of these reasons, the Order of the learned single Judge which upheld the Award of the Arbitrator does not warrant any interference.] IN THE HIGH COURT OF JUDICATURE AT MADRAS
As regards the legality of the interference of the Court to the Award of the Arbitrator is concerned, the Courts have got limited scope to interfere with the reasons and findings given by the Arbitrator on the basis of interpreting the terms of the contract. Even if an another view of interpretation or understanding of the terms of the contract is possible, those views cannot be allowed to substitute the reasoned understanding and construction given by the learned Arbitrator, so long as those views of the Arbitrator are reasonable and based on the materials placed before him. In view of these reasons, the Order of the learned single Judge which upheld the Award of the Arbitrator does not warrant any interference.]
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 18.06.2021
CORAM
THE HON’BLE MR. JUSTICE M.M.SUNDRESH
AND
THE HON’BLE Ms. JUSTICE R.N.MANJULA
O.S.A.No.105 of 2020
and
C.M.P.No.5009 of 2020
1.The Senior Regional Manager
Tamil Nadu Civil Supplies Corporation,
Tiruvarur Region,
Tiruvarur – 613701.
2.The Managing Director,
Tamil Nadu Civil Supplies Corporation,
12, Thambuswamy Road,
Kilpauk, Chennai – 10. …. Appellants/Petitioners
Vs.
M/s. Kannan Lorry Services
Rep. by its Sole Proprietor, Mr.R.Nagarajan
having its registered office at 90,
Sarangapani South Street (First Floor),
Kumbakonam – 612001. …. Respondent/Respondent
Prayer:- The Original Side Appeal is filed under Section 37 of the Arbitration & Conciliation Act, 1996, to set aside the Order dated 08.11.2018 in O.P.No.882 of 2018.
For Appellants : Ms.G.Ramapriya
For Respondent : Mr.C.D.Sugumar
JUDGEMENT
(The Judgement of the Court was delivered by R.N.Manjula,J.)
This Original Side Appeal has been filed seeking to set aside the Order in O.P.No.882 of 2018 dated 08.11.2018.
2. The Appellants were the petitioners in the Original Petition.
3. The origin of this litigation started from a contract entered into between the respondent and the petitioners/Corporation on 07.10.2010 for lifting the Civil Supplies stocks to various delivery points as per the instructions of the petitioners or their officials. As per the terms of the agreement, the respondent contractor should deposit a sum of Rs.2,00,000/- as security deposit and provide adequate number of lorries for the seamless transportation of stocks. It is alleged by the petitioners that the respondent omitted to take the goods from 07.10.2010 onwards. After issuing notice to the respondent, the first petitioner issued an Order dated 28.03.2011 for terminating his contract. Further, the first petitioner also blacklisted the respondent and forfeited the security deposit of Rs.2,00,000/-.
4. The respondent filed an Original Petition in this Court and got an order for appointment of an Arbitrator and the dispute was referred to the Arbitrator. After hearing both the parties the Arbitrator passed an Award on the following terms:-
1. The orders passed by the respondent -1 in his procs.M1/4585/2010 Dt.28.03.2011 are hereby ordered to be set aside.
2. The respondent-1 is directed to repay the Security Deposit of Rs.2,00,000/- (Two Lakhs) only to the claimant.
3. The claim of interest at 18% on the Security Deposit amount is ordered to be rejected.
4. Cost of Arbitration has to be shared by both parties on 50:50 basis.
5. The petitioners challenged the Award under Section 34 of the Arbitration and Conciliaton Act before the learned single Judge by way of filing the Original Petition and the same was dismissed. Hence the petitioners have filed this Original Side Appeal by challenging the Order of the learned single Judge passed in the Original Petition.
6. Heard Ms.G.Ramapriya, learned counsel for the appellants and Mr.C.D.Sugumar, learned counsel for the respondent.
7. The learned counsel for the Appellants/petitioners submitted that the learned Arbitrator omitted to appreciate the materials on record in a proper perspective before finding fault with the petitioners that they have not issued the movement Orders in time in order to enable the respondent to carry the loads as instructed by them.
8. The contention of the learned counsel for the respondent is that he was unable to fulfill the terms of the contract only due to non-issuance of movement Order by the petitioners’ office in time. He further submitted that at one point, he was asked to come in person to collect the movement Order, but due to some extraneous reason, it was not possible for him to go and collect it personally.
9. During the course of appreciating the facts relevant to these submissions, the learned Arbitrator has perused the records produced by both the parties and arrived at a finding that the movement Orders were not served on the respondent properly. While recording the said finding, the learned Arbitrator has also elaborated the various methods in which the movement Order could have been effectively served on the contractors and how it was omitted to be done by the Appellant office. The learned single Judge has observed that the Courts cannot interfere with the findings of the learned Arbitrator unless it is fundamentally unreasonable. The Courts have got limited scope to interfere with the reasons and findings given by the Arbitrator on the basis of interpreting the terms of the contract. Even if an another view of interpretation or understanding of the terms of the contract is possible, those views cannot be allowed to substitute the reasoned understanding and construction given by the learned Arbitrator, so long as those views of the Arbitrator is reasonable and based on the materials placed before him. Hence, the appreciation, reasoning, interpretation and understanding cannot be construed as something perverse, just because an another view of the matter is possible.
10. In Kuldeep Singh Vs. Commissioner of Police reported in [(1999) 2 SCC 10] , the Supreme Court has laid down the law on the point of what can be considered as a perverse finding and it is held as under:-
“10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with.”
11. It has been repeatedly held in various decisions of the hon’ble Supreme Court that under Section 34 of the Arbitration and Conciliation Act, 1996, the Courts have got only limited powers to interfere with the Award and it is for the learned Arbitrator to consider about the quantity and quality of the materials he should rely on, in order to test the truth of a fact placed before him.
12. In Associate Builders Vs. Delhi Development Authority reported in [(2015) 3 SCC 49], the hon’ble Supreme Court has made an elaborate reference about the various decisions of the hon’ble Supreme Court and indicated the circumstances during which the Courts can exercise its power to set aside the Award of an Arbitrator under Section 34 of the Act. And the same has been followed in the subsequent case in Parsa Kente Collieries Limited Vs. Rajasthan Rajya Vidyut Utpadam Nigam Limited, reported in [(2019) 7 SCC 236]. In the said case, it has been held as follows:-
9.1 In the case of Associate Builders (supra), this Court had an occasion to consider in detail the jurisdiction of the Court to interfere with the award passed by the Arbitrator in exercise of powers under Section 34 of the Arbitration Act. In the aforesaid decision, this Court has considered the limits of power of the Court to interfere with the arbitral award. It is observed and held that only when the award is in conflict with the public policy in India, the Court would be justified in interfering with the arbitral award. In the aforesaid decision, this Court considered different heads of “public policy in India” which, inter alia, includes patent illegality. After referring Section 28(3) of the Arbitration Act and after considering the decisions of this Court in the cases of McDermott International Inc. v. Burn Standard Co. Ltd., reported in (2006) 11 SCC 181 (paras 112113) and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran, reported in (2012) 5 SCC 306 (paras 4345), it is observed and held that an arbitral tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. It is further observed and held that construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair minded or reasonable person could do. It is further observed by this Court in the aforesaid decision in paragraph 33 that when a court is applying the “public policy” test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. It is further observed that thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score.”
13. So as per the above decisions of the hon’ble Supreme Court on the legality of the interference of the Court to the Award of the Arbitrator, the Courts cannot interfere or reappreciate the evidence and give a different reasoning, unless there is a patent illegality or error apparent on record in the findings of the Arbitrator. In fact, in the impugned Order of this case, the learned Arbitrator has recorded a well reasoned finding as to the lack of promptness and practicality on the part of the Appellants in delivering the movement Orders to the respondent. The Arbitrator has also recorded a finding that no reasonable opportunity was given to the respondent before terminating his contract and penalizing him with blacklisting and forfeiture of security deposit.
14. The learned single Judge has correctly applied the position of law on the powers and scope for Courts to interfere with the Award of the Arbitrator and held that the interference to the Award of the Arbitrator is not warranted. As held in the several decisions of the hon’ble Supreme Court, the Courts are not at liberty to substitute an another view or reason for the facts dealt by the Arbitrator, so long as the views or findings given by the Arbitrator is possible and plausible in the given circumstances. In view of these reasons, the Order of the learned single Judge which upheld the Award of the Arbitrator, does not warrant any interference.
15. Accordingly, this Original Side Appeal is dismissed. No costs. Connected miscellaneous petition is closed.
(M.M.S., J.) (R.N.M., J.)
18.06.2021
Speaking/Non-speaking
Index: Yes/No
Internet: Yes/No
Sni
To
1.Mr.R.Nagarajan,
Sole Proprietor,
M/s. Kannan Lorry Service,
having its registered office at 90,
Sarangapani South Street (First Floor),
Kumbakonam – 612001.
2.The Sub Assistant Registrar,
Original Side,
High Court, Madras.
M.M.SUNDRESH, J.
and R.N.MANJULA, J.
Sni
O.S.A.No.105 of 2020
18.06.2021
