T.S. Doabia, J.
1. As to how far the Court can go in the matter of appreciating the observations made by an arbitrator and the ultimate conclusion arrived at by him and whether in the exercise of this power the Court can act as a Court of Appeal, is an issue sought to be projected by the learned counsel appearing for the Appellant. It is urged that the learned Single Judge could not act as a Court of Appeal and re-appreciate the evidence, whereas the learned counsel appearing for M/s. Hindustan Prefab Ltd. submits to the contrary.
2. M/s. Hindustan Prefab Ltd. (hereinafter referred to as 'respondent No. 1') invited quotations for supply of 'Devdar' logs and sleepers. Tender No. HPL/POT/08/84-85, dated 27.07.1984 was floated. Appellant, a registered Timber Merchant and a Commission Agent submitted his tender. This was submitted on 06.08.1984. This was accepted and order for the supply of the timber was placed on 17.08.1984. As per terms and conditions of tender 500 cub mts. of timber was to be supplied during October 1984. Balance of 500 cub mts. of timber was to be supplied in the month of February 1985. Total amount thus was 1000 cub mts. of timber. There is no dispute so far as supply of 500 cub mts. in October 1984 is concerned. The timber was supplied and there was delay in making the payment. On delayed payment claim for interest was made. This was allowed. This is represented by Claim No. 6. This has been sustained by the learned Single Judge also. The dispute is vis-a-vis the second instalment of supply. This was to be supplied in the month of February 1985.
3. One condition of the tender was that the timber/sleeper were to be inspected. This was to be done by a committee, namely, passing committee. This committee was constituted by respondent No. 1. 90% of the payment was to be made within seven days after the receipt of the goods which were duly inspected. 5% of the value was to be retained as security deposit from each running bill which was to be returned after satisfactory completion of the work. The contract also contained a performance guarantee. This was mentioned in Clause 9 of the agreement. For facility of reference, this is reproduced below:
'9. Performance Guarantee--The progress of the supply should be given adhered to according to delivery schedule given by HPL. If the supplier fails to deliver the stores of any consignment within the stipulated period, the company shall be entitled at its own option either (a) to purchase from elsewhere without notice to supplier at the risk of the supplier.'
4. Thus as per Condition No. 9 noticed above, the supply of the timber was to be adhered to according to the delivery schedule given by respondent No. 1. There was a stipulation that if the supplier failed to deliver the goods within the stipulated period, then respondent No. 1 would be at liberty to purchase the timber from any other source and this would be at the risk of the appellant.
5. As indicated above, the dispute arose regarding the supply of second instalment of 500 cub mts. of timber. As per appellant, respondent No. 1 did not lift the timber even after inspection and postponed the date for delivery itself. This led the appellant to prefer an application before this Court. This was under Section 20 of the J&K; Arbitration Act Samvat 2002. This Court on 23.08.1989 directed that the dispute be referred to the sole arbitration of a retired Judge of this Court. An order to this effect was passed on 23.08.1989. An appeal was preferred against the said judgment. The appeal was dismissed on 23.01.1990. A SLP came to be filed in the Supreme Court of India. The Supreme Court of India granted leave and disposed of the appeal itself directing that all matters in dispute be referred to a retired Judge of Delhi High Court. In compliance with the directions given by the Supreme Court of India, the arbitrator proceeded to give the award. 10 issues were framed. The award was given on 01.05.1992. This award was challenged under Section 30/33 of the J&K; Arbitration Act. It is in these proceedings a judgment was given on 27.10.1995. The award was set aside. It is this view expressed by the learned Single Judge which is being challenged inter alia on the following grounds:
(i) That the learned Single Judge could not sit as a Court of Appeal and could not re-appreciate the merits of the controversy;
(ii) That there was absolutely no justification to come to a conclusion that the award suffered from any misconduct which could fall within the purview of Section 30/33 of the J&K; Arbitration Act;
(iii) That a new case which was not pleaded has been made out.
6. In particular, it is submitted that the observations, 'Learned arbitrator forgot the terms of the agreement and embarked upon adjudication by himself' could not be made part of the judicial record.
7. On Issue No. 10, it has been observed that the findings recorded were uncalled for and any finding in respect of this aspect of the matter would run contrary to the agreement between the parties. Again the observations made vis-a-vis specifications of goods were not justified. The interpretation placed by the learned Single Judge, it is urged is not apt. In any case the broad submission made is that the learned Single Judge could not act as a Court of Appeal.
8. The legal position in this regard be examined at the first instance.
In Sudarsan Trading Co. v. Government of Kerala, : [1989]1SCR665 , the Supreme Court of India observed that a Court conducting proceedings under Section 30/33 has no jurisdiction to substitute its evaluation of conclusion of law and fact to come to conclusion that arbitrator has acted contrary to bargain between the parties.
9. In Arosan Enterprises Ltd. v. Union of India, : AIR1999SC3804 , the view expressed is that even in the case of a speaking award, the Court cannot re-appreciate the material on the record and set aside the award. It was observed that the re-appraisal is totally unknown to proceedings under Section 30.
To the same effect is the judgment reported in H.P. State Electricity Board v. R.J. Shah and Co., 1999 (4) Supreme 161, that when arbitrator is required to construe contract, then merely because another view is possible, Court cannot construe contract in another manner.
10. In recent decision, i.e. Ispat Engineering & Foundry Works v. Steel Authority of India Ltd., : [2001]3SCR1190 , the Supreme Court of India expressed the same view. It was observed that the Court cannot be permitted to re-appreciate the evidence and material produced before the arbitrator.
11. Thus when the arbitrator has applied its mind to the pleadings, evidence and terms of the contract, there is no scope for re-appraisal by the Court. The view expressed by the Supreme Court of India in U.P. State Electricity Board v. Searsole Chemicals Ltd., : [2001]2SCR13 , is a clear proposition for this view.
12. The senior counsel appearing for the respondents however, submitted to the contrary. He has placed reliance on number of decisions and contended that even though it may not be possible to give an exhaustive definition as to what amounts to misconduct on the part of the arbitrator, this does not preclude the Court from setting aside the award. The decisions which have been referred to by the learned senior counsel are being serialised below:
(i) Food Corporation of India v. Joginderpal Mohinderpal, : AIR1989SC1263 ;
(ii) Vishwanath Sood v. Union of India and Anr., : [1989]1SCR288 ;
(iii) Alopi Parshad and Sons Ltd. v. Union of India, : [1960]2SCR793 ; and
(iv) K.P. Poulose v. State of Kerala, : AIR1975SC1259 .
13. A perusal of the decision given in Food Corporation of India v. Joginderpal Mohinderpal (supra), makes it apparent that it does not in any manner supports the view put across by the respondent No. 1. It has again been observed that if an arbitrator interprets an arbitration clause and derives a conclusion, then the construction by arbitrator would be accepted and there would be no room for setting aside the award.
14. After going through the judicial pronouncements, referred to by the learned counsel for the parties, we are of the opinion that the scope of interference in proceedings under Section 30/33 of the Arbitration Act is limited. The Court is not to act as a Court of Appeal. It is not within the domain of this Court to re-examine the conclusions arrived at by an arbitrator.
The exercise undertaken by the learned Single Judge in this regard, therefore, cannot be sustained.
15. Before parting with this judgment, we would like to observe that the learned counsel for respondent No. 1 was keen to put across that various clauses, which have been taken note of by the learned Single Judge are taken note of then, the conclusion arrived at cannot be said to be according to law. Appraisal in this matter would lead us to commit the same error, which the appellant wants to be rectified. As indicated above, going into the merits of the controversy is not within the scope of jurisdiction when proceedings are taken under Section 30/33 of the Arbitration Act. There is nothing on the record to bring the case within the other parameters contained in Section 30/ 33 of the Act. We accordingly, set aside the judgment of the learned Single Judge and direct that the award be made rule of the Court. The parties are held entitled to interest at the rate of 9% w.e.f. the date on which the proceedings were initiated in this Court. Interest prior to the initiation of proceedings would be as per the award given by the arbitrator. Decree sheet be prepared accordingly.