Ravindra Kumar Gupta & Co. Vs. Union of India  INSC 1778 (3 December
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.8019 OF
2009 (Arising out of Special Leave Petition (C) No. 3755 OF 2008) M/s. RAVINDRA
KUMAR GUPTA & COMPANY ....APPELLANT(S) VERSUS
SINGH NIJJAR, J.
Challenge in this appeal is to the Judgment dated 10.7.2007 of the
Division Bench of the High Court of Uttrakhand at Nanital whereby the Appeal
from Order (AO) No.322 of 1998 New No.242 of 2001 filed by Union of India
challenging the award of the arbitrator has been partly allowed.
The grievance made by the appellant before us is that the High
Court travelled beyond its jurisdiction in re-appreciating the evidence led by
the parties before the arbitrator and by substituting its own conclusions for the
conclusions recorded by the arbitrator.
submitted by the learned counsel for the appellant that the award of the Labour
Court had been made the rule of the court by the Court of Civil Judge, Sr.
Division, Roorkee (hereinafter referred to as the Civil Court). While
considering the objections raised by the Union of India, the Civil Court took
due notice of the evidence led by the parties before the arbitrator. It has
been specifically held that the arbitrator has not acted beyond the scope of
the reference nor can it be said that the arbitrator has misconducted himself
in law or procedure.
We may notice here the relevant facts.
appellant (hereinafter referred to as a contractor), was allotted certain civil
works on 22.3.1988. Initially, the work was scheduled to be completed on or
before 28.06.1989. However by mutual agreement, the period of contract was
extended from time to time and finally till 5.11.1990. The work was completed
Disputes arose between the parties after completion of the work
regarding the work and payment for the same. The contractor invoked the
arbitration clause contained in Clause 70 of the agreement, dated 22.3.1988.
Necessary claim was filed before the sole arbitrator under the Indian Arbitration Act, 1940 on 21.4.1994.
parties participated in the proceedings.
The arbitrator, after elaborate discussion of the entire evidence
led by the parties, passed the award dated 30.10.96.
Thereafter the contractor filed Original Suit No.184/96 in the
Civil Court with a prayer for making the award of the sole arbitrator rule of
the Court. The Union of India also filed Miscellaneous Suit No.147/96, with a
prayer for setting aside the Award. Both the suits were heard together by the
Civil Court. In the miscellaneous suit it was pleaded by the Union of India
that the award of the arbitrator is infirm being against the law and available
evidence. As such the arbitrator has misconducted himself in law. The main
issue between the parties is with regard to claim No.5. It was stated by Union
of India that the arbitrator had acted beyond its jurisdiction by allowing
claim No.5 of the contractor, contrary to the provision contained in Clause 11(c)
of IAFW 2249, which is part of the agreement, dated 22.3.1988. The Civil Court
duly framed issues. It took due notice of the objections raised by the Union of
India. It was submitted on behalf of Union of India, that the arbitrator cannot
accept any claim going beyond the scope of the dispute entrusted and referred
to him. The Civil Court specifically observed as follows:
the present case, dispute of loss suffered by the decree holder for the
hold-ups and delay was referred to the arbitrator and the ld.
has decided this dispute within his jurisdiction."
It has been specifically observed by the Civil Court that the
parties had placed the case before the arbitrator on the point in issue. It is
further observed that the arbitrator has passed the award giving reasons in
detail. Therefore it cannot be said that the arbitrator has acted beyond the
scope of reference.
The Civil Court took due notice of the settled propositions of law
that at the time of hearing of objections under Section 30 of the Arbitration Act, 1940 the Court jurisdiction of the Court is limited.
also been noticed that the Court cannot hear the objections against the award
as an appellate court, as the arbitrator is the final arbiter of the dispute
referred to him. After noticing the legal position and after examining clauses
of the agreement, the award has been made rule of the court.
The findings of the Civil Court were challenged by the Union of
India in appeal before the High Court, which has been partly allowed. In partly
allowing the appeal the Division Bench has set aside the finding recorded by
the arbitrator by merely stating as follows:
far as the contention of learned counsel for the appellant that claim No.5 is
against clause 11(c) of IAFW, which is part of the agreement, is concerned, we
have carefully perused the award given by the Arbitrator as well as the
impugned judgment of the Court below. Claim 5 was for loses due to hold-ups and
delay in the work. The Union of India in reply before the Arbitrator stated
that the delay in execution of work was due to default of the contractor
not employed sufficient manpower and resources to complete the work in time.
no reason to disregard this statement on behalf of Union of India/appellant. We
find that the Arbitrator acted unreasonably and irrationally in ignoring the
limits and the provisions of the contract as submitted by the learned counsel
for the appellant."
We are of the considered opinion that the High Court committed a
serious error in re-appreciating the evidence led by the parties before the
arbitrator. This evidence was duly scrutinized and evaluated by the arbitrator.
With regard to claim No.5, the arbitrator has given elaborate reasons.
Therefore, finding recorded by the arbitrator cannot said to be either perverse
or based on no evidence. A firm finding has been recorded that under claim No.5
there was default and delay on the part of Union of India with respect to:
payment of RARs final bill.
Delay in appointing agency for ATT.
Delay in giving decision.
Increase in height of Tent plinth (given late).
This conclusion has been erroneously substituted by the High Court
with its own opinion on appreciation of the evidence.
course was not permissible to the High Court while examining objections to the
award under Section 30 of the Arbitration Act, 1940.
The law with regard to scope and ambit of the jurisdiction of the
courts to interfere with an arbitration award has been settled in a catena of
judgments of this Court. We may make a reference here only to some of the
judgments. In the case of State of Rajasthan vs. Puri Construction Company
Limited. and Anothers. (1994) 6 SCC 485, this Court observed as follows:
arbitrator is the final arbiter for the dispute between the parties and it is
not open to challenge the award on the ground that the arbitrator has drawn his
own conclusion or has failed to appreciate the facts. In Sudarsan Trading Co.
v. Govt. of Kerala 1989 Indlaw SC 463 it has been held by this Court that there
is a distinction between disputes as to the jurisdiction of the arbitrator and
the disputes as to in what way that jurisdiction should be exercised. There may
be a conflict as to the power of the arbitrator to grant a particular remedy.
One has to determine the distinction between an error within the jurisdiction
and an error in excess of the jurisdiction. Court cannot substitute its own
evaluation of the conclusion of law or fact to come to the conclusion that the
arbitrator had acted contrary to the bargain between the parties.
particular amount was liable to be paid is a decision within the competency of
the arbitrator. By purporting to construe the contract the court cannot take
upon itself the burden of saying that this was contrary to the contract and as
such beyond jurisdiction. 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 cannot be examined by the court. Where the reasons
have been given by the arbitrator in making the award the court cannot examine
the reasonableness of the reasons. If the parties have selected their own
forum, the deciding forum must be conceded the power of appraisement of
evidence. The arbitrator is the sole judge of the quality as well as the
quantity of evidence and it will not be for the court to take upon itself the
task of being a judge on the evidence before the arbitrator.
case of Municipal Corpn. Of Delhi v. Jagan Nath Ashok Kumar 1987(4) SCC 497, it
has been held by this Court that appraisement of evidence by the arbitrator is
ordinarily never a matter which the court questions and considers. It may be
possible that on the same evidence the court may arrive at a different
conclusion than the one arrived at by the arbitrator but that by itself is no
ground for setting aside the award. It has also been held in the said decision
that it is difficult to give an exact definition of the word `reasonable'.
Reason varies in its conclusions according to the idiosyncrasies of the
individual and the time and circumstances in which thinks. In cases not covered
by authority, the verdict of a jury or the decision of a judge sitting as a
jury usually determines what is `reasonable' in each particular case.
reasonable has in law prima facie meaning of reasonable in regard to those
circumstances of which the actor, called on to act reasonably knows or ought to
know. An arbitrator acting as a judge has to exercise a discretion informed by
tradition, methodized by analogy disciplined by system and subordinated to the
primordial necessity or order in the social life. Therefore, where reasons
germane and relevant for the arbitrator to hold in the manner he did, have been
indicated, it cannot be said that the reasons are unreasonable."
In the case of Arosan Enterprises Ltd. vs. Union of India, (1999)
9 SCC 449, this Court upon analysis of numerous earlier decisions, held as
it noted that by reasons of a long catena of cases, it is now a well-settled
principle of law that re-appraisal of evidence by the court is not permissible
and as a matter of fact exercise of power by the court to reappraise the
evidence is unknown to proceedings under section 30 of the Arbitration Act. In the event of there being no reasons in the award,
question of interference of the court would not arise at all. In the event,
however, there are reasons, the interference would still be not available within
the jurisdiction of the Court unless of course, there exist a total perversity
in the award or the judgment is based on a wrong proposition of law. In the
event however two views are possible on a question of law as well, the court
would not be justified in interfering with the award.
common phraseology "error apparent on the face of the record" does
not itself, however, mean and imply closer scrutiny of the merits of documents
and materials on record. The Court as a matter of fact cannot substitute its
evaluation and come to the conclusion that the arbitrator had acted contrary to
the bargain between the parties. If the view of the arbitrator is a possible
view the award or the reasoning contained therein cannot be
This view has been reiterated by this Court in the case of Oil
& Natural Gas Corporation Ltd. vs. SAW Pipes Ltd. as follows:
the light of the aforesaid decisions, in our view, there is much force in the
contention raised by the learned counsel for the appellant.
the learned senior counsel Mr. Dave submitted that even if the award passed by
the arbitral tribunal is erroneous, it is settled law that when two views are
possible with regard to interpretation of statutory provisions and or facts,
the Court would refuse to interfere with such award.
true that if the arbitral tribunal has committed mere error of fact law in
reaching its conclusion on the disputed question submitted to it for
adjudication then the Court would have no jurisdiction to interfere with the
award. But, this would depend upon reference made to the arbitrator : (a) if
there is a general reference for deciding the contractual dispute between the
parties and if the award is based on erroneous legal proposition, the Court
could interfere; (b) It is also settled law that in a case of reasoned award,
the Court can set aside the same if it is, on the face of it, erroneous on the
provision of law or its application; (c) If a specific question of law is
submitted to the arbitrator, erroneous decision in point of law does not make
the award bad, so as to permit of its being set aside, unless the Court is
satisfied that the arbitrator had proceeded illegally."
In the M/s. Kwality Manufacturing Corporation vs. Central
Warehousing Corporation it was held:
the outset, it should be noted that the scope of interference by courts in
regard to arbitral awards is limited. A court considering an application under
Section 30 or 33 of the Act, does not sit in appeal over the findings and decision
of the arbitrator. Nor can it re-assess or re-appreciate evidence or examine
the sufficiency or otherwise of the evidence. The award of the arbitrator is
final and the only grounds on which it can be challenged are those mentioned in
Sections 30 and 33 of the Act. Therefore, on the contentions urged, the only
question that arose for consideration before the High court was, whether there
was any error apparent on the face of the award and whether the arbitrator
misconducted himself or the proceedings."
Again it is reiterated in the judgment of Madhya Pradesh Housing
Board vs. Progressive Writers and Publishers (2009) 5 SCC as follows:
finding arrived at by the arbitrator in this regard is not even challenged by
the Board in the proceedings initiated by it under Section 30 of the Act. It is
fairly well settled and needs no restatement that the award of the arbitrator
is ordinarily final and the courts hearing applications under Section 30 of the
Act do not exercise any appellate jurisdiction. Reappraisal of evidence by the
court is impermissible."
In this case, the Supreme Court notice the earlier judgment in the
case of Ispat Engineering & Foundry Works, B.S. City, Bokaro vs. Steel
Authority of India, B.S. City, Bokaro [(2001) 6 SCC 347] wherein it was held as
Needless to record that there exists a long catena of cases through which the
law seems to be rather well settled that the reappraisal of evidence by the
court is not permissible. This Court in one of its latest decisions [Arosan
Enterprises Ltd. v. Union of India (1999) 9 SCC 449] upon consideration of
decisions in Champsey Bhara & Co. v. Jivraj Balloo Spg. & Wvg. Co. Ltd.
[Air 1923 PC 66], Union of India v. Bungo Steel Furniture (P) Ltd. [1967 1 SCR
324], N. Chellappan v. Secy., Kerala SEB [(1975) 1 SCC 289], Sudarshan Trading
Co. v. Govt. of Kerala [(1989) 2 SCC 38], State of Rajasthan v. Puri
Construction Co. Ltd. [(1994) 6 SCC 485] as also in Olympus Superstructures (P)
Ltd. v. Meena Vijay Khetan [(1999) 5 SCC 651] has stated that reappraisal of
evidence by the court is not permissible and as a matter of fact, exercise of
power to reappraise the evidence is unknown to a proceeding under Section 30 of
the Arbitration Act, 1940. This court in Arosan Enterprises categorically
stated that in the event of there being no reason in the award, question of
interference of the court would not arise at all. In the event, however, there
are reasons, interference would still be not available unless of course, there
exist a total perversity in the award or the judgment is based on a wrong
proposition of law. This Court went on to record that in the event, however,
two views are possible on a question of law, the court would not be justified
in interfering with the award of the arbitrator if the view taken recourse to
is a possible view. The observations of Lord Dunedin in Champsey Bhara stand
accepted and adopted by this Court in Bungo Steel Furniture to the effect that
the court had no jurisdiction to investigate into the merits of the case or to
examine the documentary and oral evidence in the record for the purposes of
finding out whether or not the arbitrator has committed an error of law. The
court as a matter of fact, cannot substitute its own evaluation and come to the
conclusion that the arbitrator had acted contrary to the bargain between the
In our opinion, the impugned judgment of the High Court does not
fall within the limited jurisdiction available to the Court for interference in
the award of an arbitrator.
For the aforesaid reasons the appeal is allowed. The impugned
judgment of the High Court is set aside.