ORDER
S. Rajeswaran, J.
Page 1799
1. This Original petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, hereinafter called ‘the Act’, to set aside the award dated 18.9.2002 passed by 2nd respondent and consequently remand the award for passing additional award in respect of the counter claim of the petitioner and to assign reasons relating to the issue No. 3 as contemplated under Section 31(3) of the Act.
2. The brief facts as culled out from the petition are as follows:
The petitioner is a Government of India undertaking Company and they appointed 1st respondent as clearing and forwarding agent on 21.8.1995 and an agreement was entered into on that day. According to the agreement dated 21.8.1995, 1st respondent was to clear the imported sugar from Chennai Harbour and to despatch the same to various destination all over India. The sugar bags were to be delivered to M/s. Food Corporation of India. During the period between 22.8.1995 and 5.10.1995 1st respondent transported the imported sugar from Chennai port to various destinations weighing 41,518 MT. The petitioner came to know that out of 41,518 MT of sugar transported to various destinations, there was a short delivery of sugar totalling 255.107 MT valuing
Rs. 43,13,025/-. When this was brought to the notice of 1st respondent, 1st respondent ignored to assign any reason for the shortage, but was claiming a sum of
Rs. 35.65 lakhs being the service charges. On 2.9.1998, 1st respondent filed O.P. No. 665/1998 praying for an appointment of arbitrator and in that O.P., the petitioner gave an undertaking to refer the dispute to an arbitrator within 15 days. Page 1800 Accordingly the petitioner appointed 2nd respondent as arbitrator and before 2nd respondent; 1st respondent claimed a sum of
Rs. 35.60 lakhs and the petitioner claimed a counter claim for a sum of
Rs. 43,78,641.74. The arbitrator by an award dated 18.9.2002 allowed the claim of 1st respondent as prayed for and dismissed the counter claim of the petitioner. Aggrieved by the award dated 18.9.2002 the above O.P., has been filed by the petitioner under Section 34 of the Act, 1996.
3. The award was assailed on the following grounds:
1) The findings of the arbitrator in rejecting the counter claim of the petitioner on the ground of limitation is erroneous and is in conflict with Section 21 of the Act, 1996.
2) The arbitrator failed to look into the material document ascertaining the rights of the petitioner.
3) The award is not in compliance with Section 21 and Section 31 of the Act, 1996 and the agreement dated 21.8.95 and also the terms of reference dated 17.2.2000.
4. Heard the learned Counsel for the petitioner and Mr. Muthukumarasamy, learned Senior Counsel for 1st respondent. I have also perused the documents filed and the judgments referred to by them in support of their submissions.
5. The learned Counsel for the petitioner while reiterating the grounds mentioned in the petition submitted that the award has not been properly passed and therefore the same has to be remanded to 2nd respondent for fresh consideration. He relied on the following decisions in support of his contentions:
1) (State v. E.A. Cheriyan Kunju)
2) AIR 1993 Delhi 230 (R.S. Avtar Singh & Co. v. N.P.C.C. Ltd.)
3) (Hindustan Zinc Ltd. v. Friends Coal Carbonisation)
4) (Hari Shankar Singh v. Gaur Hari Sinhania)
5) (State of Kerala v. V.P. Jolly) (FB)
6) 2003 (2) CTC 282 (ONGC Ltd. v. SAW Pipes Ltd. (SC)
6. Per contra, the learned Senior Counsel for 1st respondent submitted that the award under challenge has been passed on the basis of the evidence let in by the parties and such factual finding cannot be challenged under Section 34 of the Act, 1996. The learned Senior Counsel pointed out that there is a vast difference between 1940 Act and 1996 Act and the powers Page 1801 conferred on the courts to interfere with an award. He further submitted that under the Act, 1996 the power of the courts to interfere with an award are restricted and unless sufficient grounds are shown as set out in Section 34 of the Act, 1996, courts cannot interfere with an award. He relied on the decision of the Supreme Court (Mcdermott International Inc. v. Burn Standard Co. Ltd.).
7. I have considered the rival submissions carefully with regard to facts and citations.
8. The undisputed facts are that the petitioner appointed 1st respondent as their clearing and forwarding agent for handling their bagged sugar import consignment at Chennai vide their agreement dated 21.8.1995. 1st respondent cleared the entire quantity and despatched 41,518.008 MT to various destinations during the period 22.8.1995 to 5.10.95. The petitioner’s contention is that there was a short delivery of sugar totalling 255.107 MT valuing
Rs. 43,13,025/- for which 1st respondent did not give any acceptable reasons. Therefore according to the petitioner this loss was to be made good by 1st respondent as per Clause 10 of the agreement. This was disputed by the petitioner relying on Clause 11 of the agreement by contending that once the bagged sugars were placed in the railway wagon/trucks, their job was over and they were not responsible for any shortage thereafter. On the basis of the rival contentions, 2nd respondent arbitrator framed the following seven issues:
1) Whether the claimant is entitled to the claim amount?
2) Whether the claimant lifted the consignment negligently with hooks and if so whether the claimant is liable to make good the loss sustained by the respondent on account of the negligent handling of the bags and also for having not obtained clean R.Rs, from the Railways?
3) Whether there was a short delivery of sugar totalling to 255.107 Mts valuing
Rs. 43,78,641.84/- and whether the respondent is entitled to claim the said amount?
4) Whether the claimant is bound by the terms of endorsement made in the Railway Receipts issued by the Railway?
5) Whether the claim and the counter claim made by the respective parties are barred by limitation?
6) Whether the respondent is bound by their surveyor’s report on the clearance of goods by the claimant?
7) What reliefs are the parties entitled to?
9. For the issue No. 1, the learned arbitrator found that 1st respondent is entitled to the claim of
Rs. 35.63 lakhs with interest at 18% per annum. 2nd respondent came to this conclusion after finding that this amount was not disputed by the petitioner whose objection was that 1st respondent Page 1802 should make good of the loss amounting to
Rs. 43,78,641.84 which resulted due to short delivery of 255.107 MT of sugar. The arbitrator has observed that the petitioner did not satisfactorily establish that the liability of 1st respondent continues even after the loading of the cargo in the wagon. 2nd respondent adverted to the fact that the officials of the petitioner who supervised the body of the cargo in the presence of the petitioner’s surveyors, did not raise any objection to the railway receipts issued after the loading on the railway wagon. Similarly 2nd respondent adverted to the fact that the entire unloading of the cargo from the ship was witnessed by the petitioner’s officials in the presence of independent surveyors appointed by the petitioner to monitor the work of 1st respondent. In such circumstances, 2nd respondent held that 1st respondent is entitled to claim as prayed for.
10. For issue No. 6, 2nd respondent after finding that the independent surveyors appointed by the petitioner supervised import of the sugar and issued certificate certifying that 1st respondent cleared a total of 41,518.500 Mts of sugar as per the requirement of the petitioner and there was no adverse remark against the surveyor’s report by the petitioner held that petitioner is bound by the surveyor’s report on the clearance of goods by 1st respondent.
11. For issue Nos. 3 and 5, 2nd respondent after elaborately evaluating the evidence adduced, found that 1st respondent’s claim is not barred by limitation and the petitioner’s claim is barred by limitation. Even on merits 2nd respondent found that the counter claim of
Rs. 43,78,641.84 as claimed by the petitioner by their letter dated 27.5.1998 (Ex.C33) was reduced to
Rs. 20,89,516/-unilaterally by the petitioner in their letter dated 25.8.98 (Ex.C35).
12. For issue No. 2, on the basis of surveyor’s report and their inconsistency in their counter claim, 2nd respondent held that there was no negligence on the part of 1st respondent and therefore they are not liable to make good the loss sustained by the petitioner.
13. Similarly for issue No. 4, the arbitrator after going through evidence and Clauses 8, 10 and 11 of the agreement found that the terms of the endorsement made in the railway receipt issued by the railways will not bind 1st respondent and 1st respondent is entitled to a sum of
Rs. 35.63 lakhs with interest at 18% per annum.
14. From the above it is very clear that a very reasoned award has been passed by 2nd respondent and as rightly submitted by the learned Senior Counsel for 1st respondent such factual findings cannot be re-agitated before this Court under Section 34 of the Act, 1996 as if this Court was an appellate court. Further the petitioner filed a review petition and the same was also disposed of by 2nd respondent keeping in mind that the O.P., was posted for arguments before this court.
15. In the light of the above, I do not find any grounds as made out under Section 34 of the Act, 1996 to interfere with the award under challenge.
Page 1803
16. Now let me consider the citations relied on by the learned Counsel for the petitioner to find out whether they are useful to the petitioner in their attempt to assail the award.
17. In (cited supra), a Division Bench of the Kerala High Court held that when the arbitrator has committed a misconduct by committing various illegalities and irregularities with a pre-disposition of mind in favour of the contractor and passed an award without application of mind to the terms of the agreement, the same is liable to be set aside under Section 30 of the Act, 1940.
18. I do not find any irregularity or illegality committed by 2nd respondent in the instant case and he is also not pre-disposed in favour of 1st respondent. In fact 2nd respondent has applied his mind to the various clauses contained in the agreement namely, Clauses 8, 10 and 11. Therefore the above decision cannot be applied to the facts of the present case.
19. In AIR 1993 Delhi 230 (cited supra), the Delhi High Court held that if arbitrator arrives at a finding inconsistent with his own findings or arrives at a decision ignoring the material document, the award can be set aside under Section 30 of the Act, 1940.
20. This decision is also not useful to the petitioner as I do not find any inconsistencies in the award passed by 2nd respondent.
21. In (cited supra) and in 2003 (2) CTC 282 (cited supra), the Hon’ble Supreme Court held that when the arbitrator made an award, which is in conflict with a particular clause in the agreement, the same is liable to be set aside under Section 34 of the Act, 1996.
22. In the instant case, it cannot be said that 2nd respondent has passed an award in contravention with the clauses contained in the agreement. In fact, he did consider Clause 10 relied on by the petitioner and Clause 11 relied on by 1st respondent and only thereafter came to his conclusion. Therefore these decisions are also not useful to the petitioner.
23. In 2006 (4) SCC 658 (cited supra), the Supreme Court held that Article 137 of the Limitation Act applies to an application under Section 20 of the Act, 1940 and the right to apply accrues when difference or dispute arises between the parties to the arbitration agreement.
24. This decision relied on by the learned Counsel for the petitioner to submit that their counter claim is not hit by the law of limitation. I am unable to accept this submission as the arbitrator has correctly come to the conclusion in this regard and further the counter claim was rejected not only on the ground of limitation, but also on merits. In particular 2nd respondent adverted to the inconsistencies of the petitioner in arriving at the counter claim amount on the basis of Exs.C33 and C35.
25. In (cited supra), a Full Bench of the Kerala High Court held that awards contrary to basic or obvious features of contract or traverse beyond obvious terms of the contract could be set aside under Section 30 of the Act 1940.
Page 1804
26. The above decision is also not helpful as the facts in the present case are easily distinguishable.
27 In (cited supra), relied on by the learned Senior counsel for 1st respondent, the Supreme Court has clearly pointed out the difference between the Act 1940 and the Act 1996 and the difference between Section 34 of the Act, 1996 and Sections 30, 33 of the Act, 1940.
28. In the light of the above decisions and discussions, I am of the considered view that the award under challenge cannot be interfered with under Section 34 of the Act, 1996.
29. In the result, there are no merits in the above O.P., and the same is dismissed. No costs.