Dismissed

Shri. Gyan Prakash Arya v. M/S Titan Industries Ltd.

Karnataka HC18 Mar 2021MFA/7098/2018

Case brief

AI extract

What is this about?

This Second Appeal alleged errors of jurisdiction and reasoned order requirements under the Arbitration and Conciliation Act, challenging an award confirming a modified arbitration award against the appellant for recovering gold. The High Court dismissed the appeal, holding the trial judge correct to reject jurisdictional objections and noting the limited scope of Section 37 review.

What did the court decide?

The Second Appeal was dismissed, confirming the order of the learned Trial Judge and the arbitration award against the appellant.

Shri. Gyan Prakash Arya Vs M/S Titan Industries Ltd. — Arbitration | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 18^TH DAY OF MARCH, 2021

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PRESENT

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THE HON’BLE MRS.JUSTICE S.SUJATHA

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AND

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THE HON’BLE MR. JUSTICE P.N.DESAI

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M.F.A.No.7098/2018 (AA)

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BETWEEN :

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SHRI GYAN PRAKASH ARYA S/O LATE SATYA PRAKASH ARYA AGED ABOUT 50 YEARS SOLE PROPRIETOR M/s R.M.JEWELLERY 2^ND FLOOR, BALAJI COMPLEX NO.81, IBRAHIM SAHIB STREET BANGALORE - 560 001. ...APPELLANT

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(BY SRI DHYAN CHINNAPPA, SENIOR COUNSEL FOR SRI SHUJATH AHMED, ADV.)

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AND :

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M/s TITAN INDUSTRIES LTD., TOWER A GOLDEN ENCALVE AIRPORT ROAD, BANGALORE - 560 017 REP BY ITS P.A.HOLDER & LANE OFFICER SRI T.SRINIVAS. …RESPONDENT

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(BY SRI SHRAVANTH ARYA TANDRA, ADV. & SRI N.S.SRIRAJGOWDA, ADV.)

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THIS M.F.A. IS FILED UNDER SECTION 37(1)(C) OF THE ARBITRATION AND CONCILIATION ACT, AGAINST THE ORDER DATED 28.05.2018 PASSED IN A.S.No.12/2011 ON THE FILE OF THE XXIX ADDITIONAL CITY CIVIL AND SESSIONS JUDGE,

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BENGALURU CITY (CCH-30), DISMISSING THE PETITION, HENCE CONFIRMING THE ARBITRAL AWARD DATED 04.12.2010 HEREBY MODIFIED ORDER DATED 14.01.2011.

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THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, S. SUJATHA, J ., DELIVERED THE FOLLOWING:

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J U D G M E N T

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This appeal is field under Section 37 (1)(c) of the Arbitration and Conciliation Act,1996 (‘Act’ for short) challenging the order dated 28.5.2018 passed in A.S.No.12/2011 on the file of the XIX Addl. City Civil & Sessions Judge, Bangalore City (CCH-30) [‘District Court’ for short].

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Succinctly stated the facts are that the appellant is a small time goldsmith engaged in the business of conversion of raw gold/silver into jewellery/ornaments and the respondent is a company

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engaged in the business of marketing and selling gold/silver jewellery/ornaments, operating under its brand name ‘Tanishq’. The respondent company would place orders entrusting specific job/works to the

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appellant for conversion of raw gold supplied to it into jewellery/ornaments/articles. It was contended in the claim petition that the respondent company has entrusted the job works relating to conversion of raw gold into jewellery or jewellery based articles, as such the appellant is doing business with the respondent company. As per the agreement dated 9.7.2003 both the parties have agreed to refer any dispute, disagreement or question arising out of and in connection with the said agreement including any dispute as to the existence of validity thereof shall be first attempted to resolve by mutual discussion and negotiation. In the event of failure of such negotiations, it shall be referred to arbitration in accordance with the Arbitration and Conciliation Act, 1996 [‘Act’ for short]. The respondent invoked the arbitration clause of the said agreement dated 9.7.2003 to resolve the dispute relating to the recovery of pure gold weighing 3648.80 grams said to have been lying with the appellant

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herein. On the CMP filed before this court for appointment of an arbitrator, this court in CMP No.33/2005 by order dated 9.9.2005 allowing the petition appointed Sri. S.Anantha Murthy, a retired District Judge as the sole arbitrator to adjudicate the dispute between the parties. The respondent has filed the claim petition before the arbitrator seeking for the following reliefs:

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“a. To direct the Respondent to deliver pure gold weighing 3648.80 grams to the Claimant or in the alternative direct the Respondent to pay the Claimant a sum of Rs.27,00,112.00 towards the cost of pure gold weighing 3648.80 grams (calculated at the rate of Rs.740 per gram).

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b. To direct the Respondent to pay to the Claimant a sum of Rs.11,74,545.00 towards the interest amount due on the said amount of Rs.27,00,112.00 (value of pure gold weighting 3648.80 grams) from June 2003 till date of filing of this claim and further interest on the said amounts at 18% per annum during the pendency of these

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proceedings and until realization of the same.

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c. To direct the Respondent to pay to the Claimant a sum of Rs.26,50,338.00 towards the loss which has been caused to the Claimant on account of the defaults committed by the Respondent.

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d. Award costs of the proceedings and such other and further reliefs which are just in the interest of justice and equity.”

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The arbitrator on appreciation of the

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evidence on record passed the award dated 4.12.2010 directing the appellant to return to the

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claimant/respondent within three months from the date of the award 3648.80 grams of pure gold along with interest @ 18% p.a. calculating the value of gold at Rs.740 per gram from 24.7.2004 and upto the date of delivery of the quantity of gold. In the alternative, the appellant shall pay to the claimant/respondent within the said period of three months, the market value of 3648.80 grams of pure gold along with interest @ 18%

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p.a. calculating the value of the gold at Rs.740 per gram from 24.7.2004 till the date of payment. The respondent was directed to pay to the claimant within three months from the date of the award a sum of Rs.50,000/- as the probable loss suffered by the claimant due to his failure to keep up to the time schedule in fulfilling his responsibility as a job worker. If he fails to pay that amount within three months, it shall carry interest @ 18% p.a. from the date of the award till the date of payment. Claimant was also entitled to cost which shall include the expenses shared by the claimant along with the appellant for arranging the venue for arbitration. Advocate’s fee was fixed at Rs.30,000/-.

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Subsequently, the respondent filed an

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application under Section 33 of the Act to make the computational/arithmetical/clerical corrections in the award. Notices were issued to both the counsel by the arbitrator along with the copy of the application to the

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appellant by registered post on 21.12.2010 requesting the appellant to file objections, if any, to the said application within 10 days from the date of receipt of the copy of the application, fixing the date of hearing on 8.1.2012 at 11.00 a.m. On that day, no representation was made on behalf of the appellant. Learned counsel for the claimant/respondent was heard. Considering the scope of Section 33 of the Act vis-à-vis the corrections sought for, the application came to be allowed. The corrected award dated 14.01.2011 reads thus:

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“a. The Respondent is directed to return to the Claimant within three months from today 3,348.80 grams of pure gold along with interest at 18% per annum calculating the value of gold at Rs.740.00 per gram from 24.07.2004 and upto the date of delivery of that quantity of gold.

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b. In the alternative, the Respondent shall pay to the Claimant within the said period of three months the market value of 3,648.80 grams of pure gold at [Rs.740.00 per gram at Rs.20,747.00 per 10 grams……value substituted] along with interest thereon at

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18% per annum from 24.07.2004 and up to the date of payment.

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c. The Respondent is directed to pay to the Claimant within three months from today a sum of Rs.50,00,000 (Rupees Fifty Thousand only) as the probable loss suffered by the Claimant due to his failure to keep up to the time schedule in fulfilling his responsibility as a job worker. If he fails to pay that amount within three months; it shall carry interest at 18% per annum from the date of this award and upto to the date of payment. d. Claimant is also entitled to cost which shall include the expenses shared by the Claimant along with Respondent for arranging the venue for arbitration.

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e. Advocate’s fee Rs.30,000.00.”

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5. Being aggrieved, the appellant instituted the

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petition under Section 34 of the Act before the learned Additional City Civil and Sessions Judge at Bangalore City which came to be dismissed. Hence, the present appeal.

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The arguments of the learned Senior counsel

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for the appellant are two fold. The learned arbitrator had no jurisdiction to adjudicate upon the dispute involved herein; secondly, no modification of the award ought to have been made under Section 33 of the Act.

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Placing reliance on the judgment of the

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Hon'ble Apex Court in Dyna Technologies Private Limited Vs. Crompton Greaves Limited¹ learned senior

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counsel argued that passing of an award by the arbitrator is not an empty formality. The award should be a reasoned order. Reasoning should be proper, intelligible and adequate. The award passed by the learned arbitrator is not a reasoned order as enunciated by the Hon'ble Apex Court. Thus, it was contended the order impugned is not a reasoned order since the objections regarding the jurisdiction of the arbitrator to entertain the claim was not properly appreciated and addressed. Further, the learned District Judge has

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1 (2019) 20 SCC 1

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failed to exercise the power under Section 34 of the Act when there is complete perversity in the award impugned. Learned counsel argued that the agreement dated 9.7.2003 specifically provides that the said agreement shall be effective from 9.7.2003 and shall be valid for initial period of two years which may be extended by the company, at its option, for such specific period unless terminated by the company as per terms of the agreement. The arbitration clause further makes it manifestly clear that any dispute, disagreement or question arising out of and in connection with the said agreement would be covered under the said clause. Prior to execution of the agreement dated 9.7.2003 an agreement dated 14.4.2000 was executed by the parties regarding the general terms and conditions of manufacturing gold ornaments on job work basis which does not contain any arbitration clause for resolving the dispute between the parties. It is for the first time in the agreement dated 9.7.2003 the arbitration clause

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was incorporated. The transaction of the subject dispute relates to the period prior to 9.7.2003. As such, the arbitrator had no jurisdiction to adjudicate upon the dispute involved in the present case. The mandatory requirement of examining the Clauses of the agreement before adjudicating upon the dispute was not complied with, by the learned arbitrator.

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Nextly, learned counsel argued that the learned arbitrator had failed to appreciate the scope of Section 33 of the Act while passing the modification order. Placing reliance on the judgment of the Hon'ble Apex Court in SMS Tea Estates Pvt. Ltd., Vs. Chandmari Tea Company Pvt. Ltd.,² it was submitted that the arbitral Tribunal was required to rule on its own jurisdiction with respect to the existence or validity of the arbitration agreement. Referring to the judgment

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of the Hon'ble Apex Court in Dakshin Haryana Bijli Vitran Nigam Limited Vs. M/s Navigant Technologies

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Pvt. Ltd.,³ it was submitted that under Section 34 of

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2 Civil Appeal No.5820/2011 dated 20.07.2011

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3 Civil Appeal No.791/2021 dated 02.03.2021

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the Act, the Court may either dismiss the objections and set aside the award if the grounds contained in subsections (2) and (2A) are made out. There is no power to modify an arbitral award. Reliance was placed on the judgments of the Hon'ble Apex Court in Patel Engineering Limited Vs. North Eastern Electric Power Corporation Limited⁴ and SSANGYONG Engineering. & Construction Co. Limited Vs. National Highways Authority of India⁵ .

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Inviting the attention of the court to the reliefs claimed in the claim petition, it was argued that the claimant/respondent had sought for a direction to the appellant to pay the claimant a sum of Rs.27,00,112/- towards the cost of pure gold weighing 3648.80 grams [calculated @ Rs.740/- per gram) and further sought for a direction to the appellant to pay the claimant a sum of Rs.11,74,545/- towards the interest amount due on the said amount of Rs.27,00,112/-

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4 (2020) 7 SCC 167

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5 (2019) 15 SCC 131

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from June 2003 till date of filing of the claim and further interest on the said amount at 18% p.a. during the pendency of the proceedings until realization of the same. That being the position, the learned arbitrator ought not to have modified the award directing the appellant to pay the market value of 3648.80 grams of pure gold at Rs.20,747/- per ten grams in the alternative prayer sought for.

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Learned counsel further argued that a

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counter claim was filed by the appellant before the learned arbitrator seeking for the relief of compensation towards the expenses and loss/damages incurred and suffered on account of breach of the terms of the agreement dated 9.7.2003 mainly for invoking of the bank guarantee of Rs.25 lakhs said to have been given as per the agreement dated 9.7.2003, the details of which are as follows:

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(a) Amounts covered under BG.No.200303 dt.1.9.03 for Rs.15,00,000/and BG No.200305 dated 21.8.03 for Rs.10,00,000/-: Rs.25,00,000/-

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(b) interest on Rs.25,00,000/- @18% from Feb. 04 upto date : Rs.9,00,000/-

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(c) towards continuing to maintain job work facility & employ staff & workers from January 2003 upto Feb.2004 : Rs.28,88,737/-

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(d) towards loss or expected business profits fro financial years ending 31.3.01 & 31.3.05 : Rs.31, 38864/Total Rs.94,27,601/-

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However, the said counter-claim came to be

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rejected by the learned arbitrator.

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Thus, the learned counsel argued that the

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learned District Judge has not considered these vital aspects in dismissing the petition.

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Learned counsel for the respondent

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supporting the impugned order argued that the learned Arbitrator had jurisdiction to adjudicate the point of dispute in terms of Clause 27 of the agreement dated 09.07.2003 in view of Exs.C13, C15 and C17 whereby

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the appellant had agreed to settle the dispute on or before 02.04.2004. In Ex.C16, it was made clear by the respondent that if the appellant is not making the

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payment towards the arrears before 15.03.2004 they will invoke the bank guarantee of Rs.25 Lakhs. Accordingly, bank guarantee of Rs.25 Lakhs was invoked as per the letter dated 02.04.2004. After invoking the said bank guarantee, the adjustment of 3648.80 grams of pure gold was made. Hence, the agreement dated 09.07.2003 was applicable and the Arbitrator has accordingly passed the award which cannot be held to be without jurisdiction.

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As regards modification of the award

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pursuant to the application filed under section 33 of the Act, it was argued that despite the notice served through RPAD, the appellant had remained absent. That being the position, now the appellant is estopped from raising objections to the modification of the order. Nextly, it was argued that the respondent has mainly claimed the relief of recovery of 3648.80 grams of pure gold along with interest at 18% p.a., calculating the

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value of gold at Rs.740/- per gram from 24.07.2004 and up to the date of delivery of quantity of gold which has been rightly awarded. Modification if any, made in the alternative relief claimed could not vitiate the award as long as the main prayer sought by the claimant has remained unaltered. It was argued that the scope of Section 37 of the Act being limited, this Court cannot sit in appreciation of evidence on record. The Court below having regard to the scope of Section 34 of the Act, on analyzing the material on record has rightly dismissed the Arbitration case. Hence, sought for confirmation of the same, dismissing the appeal.

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Learned counsel for the respondent has referred to the following judgments:

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1. National Insurance Co. Ltd., V/s. Boghara Polyfab Pvt. Ltd.,⁶

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2. Associate Builders V/s. Delhi Development Authority⁷

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6 AIR 2009 SC 170

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7 (2015) 3 SCC 49

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3. Rail Land Development Authority V/s. Parsvnath Developers Limited and Another⁸ .

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We have carefully considered the rival

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submissions of the learned counsel appearing for the parties and perused the material on record.

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The point that arises for our consideration

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is:-

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Whether the order impugned passed by the learned Trial Judge exercising the power Section 34 of the Act is justifiable?

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Before adverting to the facts of the present case, it is apt to refer to the judgments referred to by the learned counsel appearing for the parties.

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In Associate Builders⁷ , the Hon'ble Apex Court has extensively considered the grounds on which arbitral award may be assailed. Caution and limits on power of Court to interfere with arbitral awards under

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8 2019 (174) DRJ 625 (DB)

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the various heads of public policy of India has been explained and emphasized. While dealing with the heading “Justice”, it has been observed that the third ground of public policy is, if an award is against justice or morality, an award can be said to be against justice only when it shocks the conscience of the Court. The arbitral award awarding more than what has been claimed in the claim petition by the Arbitrator is held to be unjustifiable. Obviously, it would shock the conscience of the Court and the arbitral award will be liable to be set aside on the ground that it is contrary to justice.

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The Hon'ble Apex Court has further laid down that it must clearly be understood 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

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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. 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.

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20. In Patel Engineering Limited⁴ , the Hon'ble

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Apex Court referring to Associate Builders, on the ground of Patent illegality as a ground and the public policy for setting aside the domestic award, held that the ground of patent illegality is the ground available under the statute for setting aside a domestic award if the decision of the arbitrator is found to be perverse, or, so irrational that no reasonable person would have arrived at the same; or, the construction of the contract is such that no fair or reasonable person will, or that the view of the arbitrator not even a possible view.

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21. In Ssangyong Engineering and

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Construction Company Limited⁵ , it has been held that where an arbitral Tribunal has rendered an award which decides matters either beyond the scope of arbitration agreement or beyond the disputes referred to the arbitral tribunal, the arbitral award could be said to have dealt with decisions on matters beyond the scope of submission to arbitration. However, it has been cautioned that in the guise of misinterpretation of the contract, and consequent “errors of jurisdiction”, it is not possible to state that the arbitral award would be beyond the scope of submission to arbitration if otherwise the aforesaid misinterpretation [which would include going beyond the terms of the contract], could be said to have been fairly comprehended as “disputes” within the arbitration agreement, or which were referred to the decision of the arbitrators as understood by the authorities. It has been observed that when it comes to the public policy of India, argument based upon “most

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basic notions of justice”, such ground can be attracted only in very exceptional circumstances when the conscience of the Court is shocked by infraction of fundamental notions or principles of justice. The said judgment was rendered in the context of the Circular unilaterally issued by one party by substituting a workable formula under the agreement by another formula de-hors the agreement.

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The Hon'ble Apex Court in SMS Tea Estates

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Pvt. Ltd.,² , has held that the before an arbitrator can be appointed under Section 11 of the Act, the applicant should satisfy the learned Chief Justice or his designate that the arbitration agreement is available in regard to the contract/document in regard to which the dispute has arisen. Having regard to the limited scope of the arbitration agreement, with reference to Clause 35 of the lease deed therein, it was held that the arbitrator would have no jurisdiction to decide any dispute which

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does not relate to the lease deed, the subject matter of the dispute therein. It is further held that though the Arbitrator will have jurisdiction to decide any dispute touching upon or relating to the lease deed, as the lease deed was unregistered, the arbitration will virtually be a nonstarter.

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The Hon’ble High Court of Delhi in Rail Land Authority⁸ supra, has held that the scope of judicial scrutiny and interference by an appellate court under Section 37 of the Act is even more restricted in comparison to deciding objections to the Award under Section 34 of the Act. Reference has been made to Steel

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Authority of India V/s. Gupta Brothers Steel Tubes

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Limited⁹ , wherein it has been laid down that an error with relatable to interpretation of the contract by an arbitrator is an error within its jurisdiction and such error is not amenable to correction by Courts as such error is not an error on the face of the award. The

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9 (2009) 10 SCC 63

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Arbitrator having been made the final arbitral of resolution of disputes between the parties, the award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion. The Courts do not interfere with the conclusion of the Arbitrator even with regard to the construction of contract, if it is a plausible view of the matter.

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24. In McDermott International Inc. V/s. Burn

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Standard Co. Ltd.,¹⁰ the Hon'ble Apex Court has held as under:

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"112. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties.

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10 (2006) 11 SCC 181

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It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law. (See Pure Helium India (P) Ltd. v. ONGC [(2003) 8 SCC 593] and D.D. Sharma v. Union of India [(2004) 5 SCC 325]): (AIR 2004 SC 2631 : 2004 AIR SCW 2514)”.

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Re. Jurisdictional error:

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Applying the tests laid down by the Hon’ble

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Apex Court, we have examined the present case on the jurisdiction point. The appellant is doing business with the respondent since 1999. It was alleged that from December 2002, the performance of the appellant was not up to the mark and in this regard letters were communicated, for returning the gold lying with him. In the letter dated 17.06.2003, the appellant authorized the appellant to adjust the pending making charges that

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was payable to him and also to make use of the bank guarantee besides seeking time for the cost of gold lying with him. Accordingly, the respondent has invoked the bank guarantee for adjusting the sum of Rs.39,30,604/which was payable to the appellant towards the making charges. However, still he was in due of gold weighing 9272.92 grams. The arguments of the appellant that there was jurisdiction error cannot be countenanced firstly for the reason that the appellant himself had filed the counter claim before the learned arbitrator seeking for certain reliefs. If the reliefs claimed by the appellant in the counter claim are amenable to the jurisdiction of the learned Arbitrator, it is hard to accept that the learned arbitrator had no jurisdiction to adjudicate upon the dispute which is nothing but recovery of gold lying with the appellant after the adjustment. Ex.C13, letter dated 29.01.2014 would demonstrate that the differentiated amount after the Rs.25 Lakhs bank guarantee will be settled on or before 15.02.2004 and

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they will pay the bank guarantee of Rs.25 Lakhs by 15.03.2004.

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Ex.C17 would demonstrate that the

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respondent had invoked bank guarantee of Rs.25 lakhs in order to recover the value of material balance lying with the appellant. They had adjusted Rs.39,30,604/which was lying with them as outstanding payment due to the appellant towards labour charges against the material outstanding. They had adjusted the said value for 20,941.30 grams of pure gold from the outstanding of 24,590.10 grams of pure gold, which was lying with the appellant. After adjustment, it was made clear that 3648.80 grams of pure gold was still lying with the appellant. Having regard to these documents, it is apparent that the transaction relating to the recovery of gold from the appellant was recurring and the same was adjusted finally to 3648.80 grams as per Ex.C17-letter dated 2.4.2004. Hence, the arguments of the learned

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Senior counsel that the agreement having come into effect from 09.07.2003, the transaction in question i.e., seeking recovery of 3648.80 grams gold is not within the ambit of the said agreement, cannot be countenanced. It is true that a specific objection was raised by the appellant regarding the jurisdiction of the arbitral Tribunal to proceed with the reference. The said objection indeed was considered by the learned arbitrator and elaborately discussed in point No.1 framed therein. In point No.1 it has been held that the arbitration clause No.27 in Ex.C4 would cover the dispute, if any, between the parties in the matter of jobs entrusted to the appellant as jeweler including the delivery of the gold to him and the payments that the claimant was required to make for the jobs turned out by the respondent as admitted by the appellant as per Ex.C17 after adjustment made. There is no dispute inasmuch as the ornaments/jewellery that were required to be made by

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the appellant as per the orders placed by the claimant from time to time for which the monthly statements and confirmatory letters were required to be sent by the appellant. It is also not in dispute that the appellant was still holding the gold weighing 24,519.10 grams as per Ex.C4. Bank guarantees furnished by the appellant and the adjustment of the job work charges as well as Bank guarantees are also not in dispute. Having regard to these material aspects, the award passed by the arbitrator after application of mind and subsequently confirmed by the learned Trial Judge, cannot be held to be lacking in reasons.

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The Hon'ble Apex Court in Dyna

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Technologies¹ , has enunciated that the requirement of a reasoned order is considered on three characteristics. They are: proper, intelligible and adequate. If the reasoning in the order is improper, they reveal flaw in the decision making process. If the

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challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the Act. It is further held that the Court while exercising jurisdiction under Section 34 of the Act has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court needs to have regard to the documents submitted by the parties and the contentions raised before the Tribunal so that awards with inadequate reasons are not set aside in casual and cavalier manner. Thus, the Courts are required to be more careful while distinguishing between inadequacy of reasoning in an award and unintelligible awards as

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held by the Hon'ble Apex Court. At any stretch of imagination, the award of the arbitrator in the present case cannot be held to be unintelligible, as the same cannot be made unequivalent of providing no reasons at all. The reasons being assigned by application of mind, if such reasons are not adequate, it could be construed as inadequacy of reasons. In such situation setting aside award in casual and cavalier manner would not arise.

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The learned Trial Judge has elaborately discussed on this aspect of jurisdiction in paragraphs 10 and 11 of the impugned order. Condition No.4 of Ex.C13 has been referred to, wherein the appellant has agreed to abide the condition of complying the payment as claimed by the respondents on or before 15.3.2004 which has not been duly complied with. Yet another ground on which the objection to jurisdiction deserves to be negated is the conduct of the appellant himself in

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making the counter claim before the learned arbitrator that the bank guarantee given as per the agreement dated 09.07.2003 ought not to have been adjusted to the transactions arising prior to the said date i.e., towards the balance gold lying with him though turned down by the arbitrator, having accepted the same, now the appellant cannot turn back and argue that the learned arbitrator had no jurisdiction to adjudicate upon the issue relating to the balance gold which has been adjusted as per Ex.C17 dated 02.04.2004.

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Re. Modification of the award:

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It is true that the respondent/claimant has made a claim to direct the appellant to deliver pure gold weighing 3648.80 grams (Rs.740 per gram) to the claimant as a main relief or in the alternative sought for a direction to the respondent to pay to the claimant a sum of Rs.27,00,112/- towards the cost of pure gold weighing 3648.80 grams inter alia seeking interest on

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the said amount at 18% per annum during the

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pendency of the proceedings until realisation of the same.

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Originally award was passed by the learned

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arbitrator on 4.12.2010 directing the appellant to return to the claimant 3648.80 grams of pure gold along with interest @ 18% p.a. calculating the value of gold at Rs.740 per gram from 24.07.2004 and upto the date of delivery of that quantity of gold. On the application filed by the claimant under Section 33 of the Act seeking for corrections in the award to delete ‘at Rs.740 per gram as claimed in the claim statement’ in page.14, second para, line 20 and to delete ‘Rs.740 per gm’ and substitute the same by ‘Rs.20,747/- per 10 grams’ in page.17, para.15(b), line 3, notices were issued to the learned counsel appearing for the parties fixing the date of hearing on the scheduled date. There was no representation on the behalf of the appellant.

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The orders were passed allowing the said application making the corrections in the award on 14.1.2011. No reasons are forthcoming from the appellant for not appearing before the arbitral tribunal on the scheduled date fixed for hearing the application on Section 33 of the Act. Having not participated in the proceedings, watching the proceedings as a fence sitter, now challenging the award on the ground that the said modification vitiates the award appears to be an ingenious device designed to challenge the award.

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At this juncture, learned counsel for the

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respondent would submit that the respondent is interested in the recovery of 3648.80 grams of pure gold along with interest at 18% p.a. If the main relief awarded by the Tribunal is considered, the value of the gold is fixed at Rs.740 per gm and directed to return 3648.80 grams of pure gold along with interest @ 18%

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p.a., on the value of the gold at Rs.740 per gram from 24.7.2004 upto the date of delivery of gold.

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There is no modification of the value of the gold from Rs.740 per gram to 20,747 per 10 grams as made in the alternative relief. The alternative relief at clause (b) awarded by the Tribunal would be applicable only if the main relief at clause (a) is not amenable to the appellant. The respondent is interested only in getting 3648.80 grams of pure gold with interest @ 18% p.a. to be calculated at Rs.740 per gram as made in clause (a) of the award which has remained unaltered. Hence, the judgment relied upon by the learned counsel for the appellant in the case of Associated builders⁷ that the arbitral award ultimately awards more than what was claimed by the claimant without any acceptable reason or justification shocking the

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conscience of the Court is not applicable to the present set of facts.

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It is well settled principle that the scope of judicial scrutiny and interference by the Court under

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Section 37 of the Act is limited. An error relates to interpretation of the contract by an arbitrator is an error

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within the jurisdiction and such an error is not amenable to correction by the Courts. Merely on the reason that the arbitrator has reached a wrong conclusion in interpreting the agreement, it is not permissible to interfere with the conclusion of the arbitrator, the same being plausible view of the matter. As the court of appeal under Section 37 of the Act, there is no scope for re-assigning or re-appreciating the evidence. It is trite that an award which is injudicious or vitiated by an apparently untenable reasons, shocking

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the conscience of the Court would be amenable to judicial review under Section 37 of the Act. Mere

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attempt to reargue and reinterpret the clauses of the agreement adjudicated before the arbitral Tribunal, confirmed by the learned Trial Judge, would not call for any interference on the grounds now urged by the appellant before this Court.

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33. In Kuldeep Singh Vs. Commissioner of

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Police¹¹ , the Hon'ble Apex Court has held that 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 conclusion would not be treated as perverse and the findings would not be interfered with. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is

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11 (1999) 2 SCC 10

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the ultimate master of the quantity and quality of

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evidence to be relied upon when he delivers his arbitral award.

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34. In McDermott International Inc. Vs. Burn

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Standard Co. Ltd.,¹⁰ the Hon'ble Apex Court has categorically held that once it is held that the arbitrator had the jurisdiction, no further question to be raised and the Court would not exercise it jurisdiction unless it is found that there exists any bar on the face of the award.

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In the facts and circumstances of the case, it cannot be held that the view taken by the learned arbitrator was against the terms of the contract or he had travelled outside his jurisdiction. Applying the principles laid down by the Hon'ble Apex Court when setting aside an award under the public policy, it cannot possibly include what the court thinks is unjust on the facts of the case substituting its view for the arbitrator’s

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