Arbitration Petition No.241 of 1995

29th February, 1996

Petitioner Counsel: Mr. MANGAL BHANDARI with Mr. A.J. BHOR i/b Mrs.A.H.CHHADA & Anr.
Respondent Counsel: Mr. P.K.SAMDANI i/b M/s.BAGLA DANDEKAR & CO.

Cases Cited:
AIR 1970 SC 833 [Para 6]
AIR 1969 SC 1238 [Para 7]
AIR 1989 SC 890 [Para 9]
1995 (III) C.C.C. 92 [Para 11]

JUDGMENT

JUDGMENT : - The Municipal Corporation of Greater Bombay, the Petitioners herein, have filed this Petition to have the Award dated 28th April 1995 made by the Sole Arbitrator declared as null and void and set aside.

2. The Petitioners had invited tenders for providing and laying 1,800 mm dia RC (NP 3 Class) pipe-Sewer along 90' DP road from MH 63 to MH 69 Dharavi Part IV (for short, 'the said Work'). The tender of the Respondent, who has been carrying on business as sole proprietor in the firm name and style of 'Adarsh Builders', was accepted and the said work was entrusted to the Respondent for being carried out by the Respondent on the terms and conditions contained in the Contract entered into by end between the Petitioners and the Respondent. The General Conditions of Contract for civil works of the Municipal Corporation of Greater Bombay were agreed to form part of the terms and conditions of the said Contract along with other documents mentioned in paragraph 3 of the Petition. The work Order dated 15th May 1987 was issued in favour of the Respondent and the Respondent, as stipulated in the said work Order, was to complete the said work within 13 months to be reckoned from 1st October 1987. The work actually commenced from 16th December 1987. The period for the completion of the said work was extended from time to time. It is the case of the Petitioners that on review the Petitioners found that the Respondent was making progress in carrying out the said work at a slow pace and as such the petitioners decided to treat the Contract work as complete. By their letter dated 20th September 1990 the Petitioners communicated to the Respondent accordingly.

3. By the letter dated 21st March 1991 addressed to the Chief Engineer of the Petitioners, the Respondent put forward the claims arising under or in respect of the said Contract and gave notice to claim interest at the rate of 18% per annum if the claims of the Respondent were not settled within one month therefrom. By their letter dated 29th April 1991, the Petitioners informed the Respondent that except for the claim for extra work, the other claims put forward by the Respondent were not acceptable. By his letter dated 30th July 1991 addressed to the Municipal Commissioner, the Respondent referred to the Municipal Commissioner the disputes and claims mentioned in the said earlier letter dated 21st March 1991 and gave notice under Clauses 96 and 97 of the General Conditions of Contract for settlement or reference thereof to arbitration in accordance with the arbitration agreement between the Petitioners and the Respondent contained in the said Clause 97. The said letter dated 30th July 1991 was addressed by the Respondent in compliance with requirements of the said Clause 96. Since no decision was taken by the Municipal Commissioner and the period mentioned in Clause 96 lapsed, the Respondent addressed another letter dated 14th August 1992 to the Municipal Commissioner to choose one of the three names suggested therein for appointment as the sole arbitrator and intimated to the Municipal Commissioner that in case of failure to do so, the Respondent would approach the President, Institute of Engineers (India) for appointment of a sole arbitrator. Since the Petitioners did not comply with the requisitions contained in the said letter, by his letter dated 21st September 1992, the Respondent called upon the President, Institute of Engineers (India) Calcutta to appoint a sole arbitrator in terms of Clauses 97(ii) of the General Conditions of Contract. By its letter dated 9th December 1991 the Institute of Engineers (India) appointed one MC Bhide as the Sole arbitrator in the disputes referred to arbitration by the Respondent. The said M C Bhide as sole arbitrator has made the Award on 28th April 1995 which has been filed in this Court and numbered as Award No.82 of 1995. The said Award has been challenged by the Petitioners by the present petition.

4. Mr. Pandye, the learned Counsel appearing for the Petitioners, on instructions stated that though in the Petition the legality of the said Clause 97(ii) has been challenged, the Petitioners were neither pressing their challenge to the legality of the said Clause 97(ii) nor to the appointment of the said M C Bhide as sole Arbitrator by the Institute of Engineers (India). Mr. Pandye challenged the said Award on the grounds that:

(i) it is not duly stamped inasmuch as it violates the compliance of provisions of Section 34 of the Bombay Stamp Act 1958 as amended by the Maharashtra Tax Laws (Levy and Amendment) Act, 1994 which has come into effect from 1st May 1994;

(ii) the Arbitrator misconducted the proceedings before him by ignoring the special directions and/or terms contained in the said contract and giving precedence to the General Conditions of Contract over the special directions and/or terms of the said Contract; and

(iii) the said Award has been made in contravention of the terms of the said contract inasmuch as the Arbitrator has based it on improper reading and illegal interpretation of the terms of the said Contract thereby arriving at wrong findings and conclusions.

5. The said Award has been made on Non-Judicial Stamp paper of Rs.100/- issued in the name of the firm of the Respondent. Though the said Award is written on the requisite stamp paper of Rs.100/-, Mr. Pandye has submitted that as per Section 34 of the Bombay Stamp Act, 1958 as amended by the Maharashtra Tax Laws (Levy and Amendment) Act, 1994, the said stamp paper was required to be issued in the name of the Arbitrator, he being the executor of the said Award thereon and as the said Award is executed by the Arbitrator on the Stamp paper issued in the name of the firm of the Respondent, it contravenes the provisions of Section 34 as amended and as such, is invalid and bad in law. The submission is devoid of any merit. The relevant portion of Section 34 as amended reads as under :

"Instruments not duly stamped inadmissible in evidence, etc. No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer unless such instrument is duly stamped or if the instrument is written on sheet of paper with impressed stamp and the executor or one of the executors is the person in whose name such stamp paper is purchased.

Provided that -

(a) any such instrument, shall subject to all just exceptions, be admitted in evidence on payment of -

(i) the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, the amount required to make up such duty, and

(ii) a penalty of five rupees or, ten times the amount of deficient portion thereof,

(b) ...

(c) ...

(d) ...

(e) nothing herein contained shall prevent the admission of a copy of any instrument or of an oral admission of the contents of any instrument, if the stamp duty or a deficient portion of the stamp duty and penalty as specified in clause (a) is paid."

The underlined portion of the section has been brought into effect by the Maharashtra Tax Laws (Levy and Amendment) Act, 1994 with object to provide for a bar on the use of sheets of paper with impressed stamp by a person other than the person in whose name the impressed stamp paper has been purchased.

6. An 'Award' as defined by Section 2(b) of the Arbitration Act 1940 (for short 'the Act') means an arbitration award. An award means a judgment or final decision and for purposes of the Act, it means the decision of an arbitrator given judicially on a reference made to him under one or other section of the Act. An Award is the result of a judicial decision. It has to be in writing and as required by Section 14 of the Act, it is to be signed by the arbitrators or the umpire as the case may be. The mere writing of the award, therefore, does not amount to making of an award, An award is made when it is signed. The arbitrators or the umpire, as the case may be, is a tribunal of the choice of parties selected to get disputes and differences between them adjudicated upon, renders decision adjuciating upon disputes and differences referred for arbitration. Such decision is for the benefit of the parties to the reference. The award so made is not a mere waste paper but has some legal effect. It is final and binding on the parties and it cannot be said it is a waste paper unless it is made a rule of the Court. It is a final adjudication of a Court of the parties' own choice, and until impeached upon sufficient grounds in an appropriate proceeding, is conclusive upon the merits of the controversy submitted. As held by the Supreme Court in the case of Satish Kumar & others Vs. Surinder Kumar & Others reported in AIR 1970 SC 833, as between the parties and their privies, an award is entitled to that respect which is due to judgment of a Court of last resort. Except that the arbitrators or the umpire, as the case may be sign the decision in the capacity as the tribunal authorised by the parties to the reference to make the award, neither the arbitrators nor the umpire can be said to be personally interested in. Accordingly, the amendment to Section 34 has to be read down so as not to make it obligatory on the adjudicating authority, forum or the tribunal to have the sheets of paper with impressed stamp purchased in its own name for writing its decision thereon to sign the same.

7. As held by the supreme Court in the case of Hindustan Steel Ltd.Vs. M/s. Dilip Construction Co., reported in AIR 1969 SC 1238, the Stamp Act is a fiscal measure enacted to secure revenue for the State on certain cases of instruments. It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponents. The stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of initial defect in the instrument. In the instant case, the object of securing revenue for the State has been duly taken care of by the Arbitrator since the said Award has been made on the requisite stamp paper of Rs.100/-. It is amazing that a public body like the Petitioners has taken objection to the said Award on such flimsy ground. The said Award made by the Arbitrator on a sheet of paper impressed with stamp issued in the firm name of the Respondent is legal, valid and proper.

8. Moreover, the Arbitrator has recorded in the minutes of the meeting held before him on 23rd March 1995, had directed the Respondent to supply the stamp paper of Rs.100/- to make his Award. The Arbitrator was a Tribunal of the choice of the parties to decide the disputes referred to him for arbitration. After hearing the parties and on deciding to make the award in favour of the Respondent, the Arbitrator justifiably called upon the Respondent to furnish the stamp paper of requisite value for making the said Award thereon. Merely because the said Award has been made on the sheet of paper with impressed stamp of Rs.100/- issued in the name of the firm of the Respondent, a party to the reference, the said Award is made neither in contravention of the said Section 34 as amended nor is inadmissible in evidence nor invalid nor bad in law. By and large it is always an obligation of either of the parties to the reference to arbitration and preferably of the party in whose favour the award is to be made to furnish the stamp paper of requisite value to the arbitrators or umpire, as the case may be, for making the award thereon. In the instant case, this having been done, I find no infirmity in the procedure followed by the Arbitrator in making the said Award. In any event, this can not be a ground for setting aside the said Award under the provisions of Section 30 of the Act.

9. The said Award is a speaking Award. The Arbitrator for the cogent reasons recorded therein has held that the petitioners failed to perform the contractual obligations which resulted into delays in execution of the said work giving rise to the claim of the Respondents, The relevant terms of the contract concerned with the claims of the Respondent before the Arbitrator were interpreted by the Arbitrator with the assistance of the representatives appearing of the parties and the submissions made before him. The Arbitrator was called upon to decide the claims of the Respondent against the Petitioners as per the terms and conditions of the said Contract including the special directions and/or terms incorporated therein or forming part thereof. There was no dispute as to the Contract between the parties. Accordingly, the question of interpretation of the terms and conditions of the said Contract including the special direction and/or terms was referred to the Arbitrator and on interpretation thereof, the decision of the Arbitrator on certain amounts awarded being a possible view, the said Award can not be examined by the Court. In the case of Messrs. Sudarsan Trading Co. Vs. The Government of Kerala & Anr. reported in AIR 1989 SC 890, the Supreme Court has in terms stated -

"Once there is no dispute as to the contract, what is the interpretation of that contract, is a matter for the arbitrator and on which Court cannot substitute its own decision. If on a view taken of a contract, the decision of the arbitrator on certain amounts awarded, is a possible view though perhaps not the only correct view, the award can not be examined by the Court".

Every assuming that there was an error of construction of the terms and condition of the said contract including the Special directions and or terms forming part thereof or even that there was an error of law in arriving at a conclusion, which in my view was non, such an error is not an error which is amenable to correction even in a reasoned award under the law. In order to set aside an award, there must be a wrong proposition of law laid down in the award as the basis of the award. No wrong proposition of law has been laid down in the said Award as the basis thereof. As mentioned in the said Award, the question whether it was or not the contractual obligation of the Petitioners to supply 18 mm R.C.Pipes to the Respondent was before the Arbitrator and the Arbitrator was called upon to adjudicate the claim of the Respondent in respect thereof. The very argument as submitted by the learned Counsel for the Petitioners pertaining to column 8 of Annexure B being blank suggesting thereby that the supply of RCC pipes was the contractual obligation of the Respondent was advanced on behalf of the Petitioners before the Arbitrator and the Arbitrator, after construing the documents placed for consideration and hearing the arguments advanced before him, concluded that in view of Condition 59B of the General Conditions of Contract and other conditions and directions it was contractual obligation of the Petitioners to supply the requisite RCC pipes and as such, the Respondent was entitled to the claim to the extent as awarded by the Arbitrator. Clause 15 of the General Conditions of Contract on which reliance has been placed by the learned Counsel for the Petitioners applies to the drawings and specifications as mentioned therein and not generally to all the contractual obligations under the said Contract.

10. Mr. Pandye has submitted that while allowing the claim of the Respondent in respect of excavation of hard rock the Arbitrator has made the said Award in contravention of the terms and condition s of the said Contract and as such, the said Award is liable to be set aside. The submission is devoid of any merit. During the execution of the said Work originally entrusted to the Respondent under the said Contract, the alignment of proposed sewer was changed by the Petitioners from what was planned earlier at the time of tender and entering into the said contract. The Respondent had submitted the tender on the basis of intimate knowledge of area and quoted the rate keeping in view the type of rock expected to be excavated as per invitation for tender. However, due to the change in alignment effected by the Petitioners after entering into the said Contract, the Respondent met with a very hard rock and for excavation with this rock, the Respondent had claimed extra. On interpretation of the terms and conditions of the said Contract, the Arbitrator held that in view of changes effected in the original alignment, the term in the said contract prescribing rate for excavation of rock did not bind the Respondent for the changed portion of alignment. Since subsequent to entering into the said Contract, the alignment was changed, the liability to make extra payment for the changed alignment has been properly saddled on the Petitioners and the Arbitrator has not contravened or acted contrary to or in breach of the terms and/or condition of the said Contract while allowing the claims of the Respondent for hard rock excavation in changed alignment. Similarly the claims of the Respondent pertaining to dewatering and excess work in respect of wood etc. have been considered by the Arbitrator on the merits thereof while interpreting the terms and conditions of the said Contract and the view taken by the Arbitrator on interpretation of the terms and conditions of the said Contract being the possible view, it is not permissible for this Court in the present proceedings to interfere with the said Award.

11. Though repeatedly it has been held by the Supreme court, this Court and other High Courts that the ambit and scope of Section 30 of the Act is circumscribed and an award is not vulnerable to any challenge thereto, parties to dispute invariably make effort to challenge an award on merits of the claims already adjudicated or decided in arbitration, a tribunal of the choice of parties, which is not permissible. In the proceedings under Section 30 of the Act, the Court is not to reappraise or reappreciate the evidence led before the Arbitrator and not to sit in appeal over the award. The quantity and quality of evidence produced before the arbitrator can not be questioned before the Court. As held by the Supreme Court in the case of the State of U.P. Vs. M/s. Ram Nath International Const, Pvt. Ltd., reported in 1995 (III) C.C.C. 92, on which reliance has been placed by Mr. Samdani, the adjudication of the arbitrator is generally binding between the parties and it is not open to the Court to attempt to probe the mental process by which the arbitrator has reached his conclusion. It is further held that the arbitrator having considered all the relevant materials and there being no legal proposition which has formed the basis for acceptance of higher rate and on the other hand the same being arrived at on account of the abnormal increase in the quantity of work which was on account of change of drawings and designs, the Court will not be justified in interfering with the same. In the facts of instant case, the ratio of the judgment of the Supreme Court does apply.

12. Since the Petition is devoid of any merit, it deserves to be dismissed at this stage itself. Hence, the Petition is dismissed. However, there shall be no order as to costs.

13. Since the Court has refused to set aside the said Award, Mr. Samdani, learned Counsel for the Respondent applied for decree in terms of the said Award. Under Rule 787(5) of the Rules of this High Court as applicable on its Original Side, this Court is empowered to pass decree in terms of the award on refusal to set aside the same. Hence, judgment is pronounced and decree passed in terms of the Award dated 28th April 1995 filed in this Court and numbered as Award No.82 of 1995. The Petitioners are also ordered and decreed to pay further interest at the rate of 18% per annum on the principal sum of Rs.26,97,432.08 from the date hereof till payment or realisation whichever is earlier.

14. C.C. expedited.

Petition dismissal.