Supreme Court of India
M/S. RAVINDRA KUMAR GUPTA & COMPANYversusUNION OF INDIA
- Citation
- 2009 INSC 1278
- Decided
- 3 December 2009
- Disposal
- Appeal(s) allowed
- Bench
- TARUN CHATTERJEE
Holding
The High Court exceeded its jurisdiction by re‑appraising the arbitrator’s evidence; the award was not perverse and therefore cannot be set aside.
Summary
The contractor, Ravindra Kumar Gupta & Co., completed civil works for the Union of India and later claimed losses due to delays and hold‑ups. An arbitrator under the Arbitration Act, 1940 examined the evidence and awarded relief, finding that the Union was at fault for delayed payments and other defaults. The Union challenged the award, and the High Court set aside the arbitrator’s findings, substituting its own view of the evidence. On appeal, the Supreme Court held that the High Court had exceeded its limited jurisdiction under Section 30 by re‑appraising the arbitrator’s evidence and that the award was not perverse nor unsupported by evidence. Consequently, the High Court’s order was set aside and the arbitrator’s award reinstated.
Issues considered
- Whether the High Court erred in re‑appraising the evidence and substituting its own conclusions while exercising jurisdiction under Section 30 of the Arbitration Act, 1940.
- Whether the arbitrator acted beyond the scope of his reference by allowing claim No.5.
- Whether the award can be set aside on the ground of perversity or lack of evidence.
Legislation cited
- Arbitration Act, 1940s. 30, s. 33
Subjects
ArbitrationSection 30Award setting asideRe‑appraisal of evidenceJurisdictionCivil works contractDelay and default
Judgment
[2009) 16 (ADDL.) S.C.R. 142
A M/S. RAVINDRA KUMAR GUPTA & COMPANY
v.
UNION OF INDIA
(Civil Appeal No. 8019 of 2009)
DECEMBER 03, 2009
8
(TARUN CHATIERJEE AND SURINDER SINGH
NIJJAR, JJ.]
Arbitration Act, 1940 - s. 30 - Setting aside of award -
c Dispute relating to civil works - Arbitration award - High Court
setting aside the findings of arbitrator- Correctness of - Held:
High Court erred in re-appreciating evidence led by parties
before the arbitrator - Arbitrator had duly scrutinized and
evaluated the evidence and gave elaborate reasons with
D regard to the clairn - Thus, finding of arbitrator not perverse
or based on no evidence - Order of High Court set aside.
Dispute arose between the parties with regard to civil
works. The appellant-contractor claimed losses due to
hold-ups and delay in work. Arbitrator passed the award.
E
Respondent-Union of India contended that the delay in
execution of work was due to default of the contractor
himself; and that the arbitrator had acted beyond its
jurisdiction by allowing the claim contrary to the provision
~
contained in the agreement. The civil court made the
F award the rule of the court. Respondent filed appeal.
Division Bench of High Court set aside the finding
recorded by the arbitrator. Hence the present appeal.
Allowing the appeal, the Court .
G
HELD: 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 the claim, the
H 142
RAVINDRA KUMAR GUPTA & COMPANY v. UNION 143
OF INDIA
'
arbitrator gave elaborate reasons. Therefore, finding
recorded by the arbitrator cannot said to be either
A
perverse or based on no evidence. A firm finding was
recorded that under the claim there was default and delay
on the part of Union of India with respect to: the payment
of RARs final bill, delay in appointing agency for ATT, B
delay in giving decision and increase in height of Tent
plinth (given late). High Court erroneously substituted the
said conclusion with its own opinion on appreciation of
the evidence. Such a course was not permissible to the
High Court while examining objections to the award u/s. c
30 of the Arbitration Act, 1940. Thus, 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. The impugned judgment of the
High Court is set aside. [Paras 11, 12, 19 and 20] [147-B-
0
F; 153-B-C]
State of Rajasthan vs. Puri Construction Company
Limited. and Anothers. (1994) 6 SCC 485; Arosan
Enterprises Ltd. vs. Union of India {1999) 9 SCC 449; Oil and
Natural Gas Corporation Ltd. v. Saw Pipes Ltd. AIR 2003 SC E
2629; Madhya Pradesh Housing Board vs. Progressive
Writers and Publishers (2009) 5 SCC 678; /spat Engineering
& Foundry Works, 8. S. City, Bokaro vs. Steel Authority of
India, B.S. City, Bokaro (2001) 6 SCC 347, referred to.
+
F
Case Law Reference:
(1994) 6 sec 485 Referred to. Para 13
' (1999) 9 sec 449 Referred to. Para 14
AIR 2003 SC 2629 Referred to. Para 15
G
(2009) 5 sec 678 Referred to. Para 17
(2001) 6 sec 347 Referred to. Para 18
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8019 of 2009.
H
,.
144 SUPREME COURT REPORTS [2009) 16 (ADDL) S.C.R.
f
A From the Judgment & Order dated 10.7.2007 of the High
Court of Uttarakhand at Nainital in Appeal from Order No. 242
of 2001 (Old No. 322 of 1998).
Dharmendra Kumar Sinha, Sunil Prakash Sharma for the
B Appellant.
Bishwajit Bhattacharyya, ASG, Ashok K. Srivastava, Aditya
Sharma, Anil Katiyar, B. Krishna Prasad for the Respondent.
The Judgment of the Court was delivered by
c
SURINDER SINGH NIJJAR, J. 1. Leave granted.
2. 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
D
New No.242 of 2001 filed by Union of India challenging the
award of the arbitrator has been partly allowed.
3. The grievance madt:: by the appellant before us is that
the High Court travelled beyond its jurisdiction in re-appreciating
E the evidence led by the parties before the arbitrator and by
substituting its own conclusions for the conclusions recorded
by the arbitrator. It is 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, I
F 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
G that the arbitrator has misconducted himself in law or procedure.
4. We may notice here the relevant facts. I
The appellant (hereinafter referred to as a contractor), was
allotted certain civil works on 22.3.1988. Initially, the work was
H scheduled to be completed on or before 28.06.1989. However
RAVINDRA KUMAR GUPTA & COMPANY v. UNION 145
OF INDJA [SURINDER SINGH NIJJAR, J.]
)' by mutual agreement, the period of contract was extended from A
-' time to time and finally till 5.11.1990. The work was completed
on 3.11.1990.
5. Disputes arose between the parties after completion of
the work regarding the work and payment for the same. The 8
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. Both the parties participated in the
proceedings.
c
6. The arbitrator, after elaborate discussion of the entire
evidence led by the parties, passed the award dated 30.10.96.
7. Thereafter the contractor filed Original Suit No.184/96
in the Civil Court with a prayer for making the award of the sole D
arbitrator rule of the Court. The Union of India also filed
y 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 E
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
F
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 G
specifically observed as follows:
"In the present case, dispute of loss suffered by the
decree holder for the hold-ups and delay was referred to
H
146 SUPREME COURT REPORTS (2009] 16 (ADDL.) S.C.R.
(
A the arbitrator and the Id. Arbitrator has decided this dispute
within his jurisdiction."
8. 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
B
passed the award giving reasons in detail. Therefore it cannot
be said that the arbitrator has acted beyond the scope of
reference.
9. The Civil Court took due notice of the settled
c propositions of law that at the time of hearing of objections
under Section 30 of the Arbitration Act, 1940 jurisdiction of the
Court is limited. It has 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.
D After noticing the legal position and after examining clauses of
the agreement, the award has been made rule of the court.
10. 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
E
has set aside the finding recorded by the arbitrator by merely
stating as follows:
"So far as the contention of learned counsel for the
appellant that claim No.5 is against clause 11 (c) of IAFW,
F 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
G delay in execution of work was due to default of the
contractor himself. He had not employed sufficient
manpower and resources to complete the work in time.
There is no reason to disregard this statement on behalf
of Union of India/appellant. We find that the Arbitrator acted
H
RAVINDRA KUMAR GUPTA & COMPANY v. UNION 147
OF INDIA [SURINDER SINGH NIJJAR, J.]
unreasonably and irrationally in ignoring the limits and the A
provisions of the contract as submitted by the learned
counsel for the appellant."
11. We are of the considered opinion that the High Court
committed a serious error in re-appreciating the evidence led 8
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 C
recorded that under claim No.5 there was default and delay on
the part of Union of India with respect to:
(i) The payment of RARs final bill.
- ....
(ii) Delay in appointing agency for ATT. D
y (iii) Delay in giving decision.
(iv) Increase in height of Tent plinth (given late).
12. This conclusion has been erroneously substituted by E
the High Court with its own opinion on appreciation of the
evidence. Such a course was not permissible to the High Court
while examining objections to the award under Section 30 of
the Arbitration Act, 1940.
t
13. The law with regard to scope and ambit of the F
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 G
as follows:
"The arbitrator is the final arbiter for the dispute
between the parties and it is not open to challenge the
H
148 SUPREME COURT REPORTS (2009] 16 (ADDL.) S.C.R.
~'
A 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 Kera/a 1989 lndlaw SC
463 it has been held by this Court that there is a distinction
between disputes as to the jurisdiction of the arbitrator and
B 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
c 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. Whether
a 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
D 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.
E 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 t
F 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.
In the case of Municipal Corpn. Of Delhi v. Jagan
G 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
H
RAVINDRA KUMAR GUPTA & COMPANY v. UNION 149
OF INDIA [SURINDER SINGH NIJJAR, J.]
conclusion than the one arrived at by the arbitrator but that A
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. B
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. The word
reasonable has in law prima facie meaning of reasonable
in regard to those circumstances of which the actor, called c
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 0
relevant for the arbitrator to hold in the manner he did, have
been indicated, it cannot be said that the reasons are
unreasonable."
14. In the case of Arosan Enterprises Ltd. vs. Union of
India, (1999) 9 SCC 449, this Court upon analysis of numerous E
earlier decisions, held as follows:
"Be 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 F
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 beit'.J
no reasons in the award, question of interference of the
court would not arise at all. In the event, however, there are G
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 H
150 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A not be justified in interfering with the award.
The 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
B
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
examined ......... ".
c
15. This view has been reiterated by this Court in the case
of Oil & Natural Gas Corporation Ltd. vs. SAW Pipes Ltd. AIR
2003 SC 2629 as follows:
D "In the light of the aforesaid decisions, in our view,
'1
there is much force in the contention raised by the learned
counsel for the appellant. However, 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
E
of statutory provisions and or facts, the Court would refuse
to interfere with such award.
It is true that if the arbitral tribunal has committed
mere error of fact law in reaching its conclusion on the
F 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 l0r deciding
the contractual dispute between tht> parties and if the •
G 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
H
RAVINDRA KUMAR GUPTA & COMPANY v. UNION 151
OF INDIA [SURINDER SINGH NIJJAR, J.]
to the arbitrator, erroneous decision in point of law does A
not make the award bad, so as to permit of its being set
aside, unless the Gou.rt is satisfied that the arbitrator had
proceeded illegally."
16. In the Mis: Kwality Manufacturing Corporation vs. B
Central Warehousing Corporation it was held:
" "At 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 c
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
'I' are those mentioned in Sections 30 and 33 of the Act. D
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." E
17. Again it is reiterated in the judgment of Madhya
Pradesh Housing Board vs. Progressive Writers and
-t Publishers (2009) 5 SCC 678 as follows:
"The finding arrived at by the arbitrator in this regard F
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 G
any appellate jurisdiction. Reappraisal of evidence by the
court is impermissible."
18. In this case, the Supreme Court notice the earlier
judgment in the case of /spat Engineering & Foundry Works,
H
..
152 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
A B.S. City, Bokaro vs. Steel Authority of India, B.S. City,
Bokaro [(2001) 6 SCC 347] wherein it was held as follows:
"4. 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
B
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 Ba/loo Spg. & Wvg. Co. Ltd. [Air 1923 PC
66], Union of India v. Bungo Steel Furniture (P) Ltd. [1967
c 1 SCR 324], N. Chellappan v. Secy., Kera/a SEB [(1975)
1 SCC 289], Sudarshan Trading Co. v. Govt. of Kera/a
[(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
D [(1999) 5 sec 651) has stated that reappraisal of
evidence by the court is not permissible and as a matter 'f
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
E categorically stated that in the event of there being nc
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 t
F 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 t~.t:i arbitrator
if the view taken recourse to is a possible view. The
G 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
pu·poses of finding out whether or not the arbitrator has
H
RAVINDRA KUMAR GUPTA & COMPANY v. UNION 153
OF INDIA [SURINDER SINGH NIJJAR, J.]
· committed an error of law. The court as a matter of fact, A
cannot substitute its own evaluation and come to the
conclusion that the arbitrator had acted contrary to the
bargain between the parties."
- 19. In our opinion, the impugned judgment of the High Court
does not fall within the limited jurisdiction available to the Court
8
for interference in the award of an arbitrator.
20. For the aforesaid reasons the appeal is allowed. The
impugned judgment of the High Court is set aside.
c
N.J. Appeal allowed.
rl
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