R.C. Jain, J.
1. By means of an advertisement dated 15.11.98 the Airport Authority of India (AAI) invited tenders/offers for 'revenue contract for removal and disposal of garbage from various designated points at Indira Gandhi International Airport. The petitioner/objector submitted his bids/tenders quoting two rates (i) Rs. 3,13,000/- per month if garbage is handed over to him as per the existing system and (ii) Rs.5,35,000/- per month if entire wet garbage is handed over to him by M/s Taj, Oberoi and Ambassador Flight Kitchens at their premises.' Vide a letter dated 15.3.99 the respondent accepted the offer of the petitioner and awarded the contract. A license Agreement dated 8.7.99, came to be executed between the parties. Disputes/differences arose between the parties with respect to the delivery of the wet garbage as the flight kitchen operators did not permit the petitioner to lift the wet garbage from their units despite various representations of the petitioner. The respondent tried to resolve the dispute by writing to the flight kitchen operators and also holding meetings with them but without much success. The petitioner approached this Court for invoking Arbitration Agreement contained in Clause 26 of the general terms and conditions forming part of the agreement for adjudication of the disputes. Vide order dated 14.10. 99 this Court referred the following disputes to the sole Arbitrator:
(a) Airports Authority of India has failed to ensure supply of wet garbage from the flight kitchen units of Taj Air Caterer, Oberoi Flight Services, Ambassador Flight Kitchen and Chef-Air Flight Kitchen-Effect thereof.
(b) Effect of not introducing token system at Steel Gate, Terminal-I
( c) Heavy losses suffered by the petitioner because of the breach of the terms and conditions committed by the respondents.
(d) In the circumstances of the case, are the respondents entitled to claim a sum of Rs.5,35,000/- per month from the claimants?
(e) That since the respondents are not able to enforce the terms and conditions of the license agreement particularly to arrange providing wet garbage from the flight kitchen units of the four caterers and also failure to introduce token system at Steel Gate, Terminal-1, is the petitioner entitled to pay only a sum of Rs.1,90,000/- per month during the period of contract?
(f) Other disputes related to the matter connected with the license.'
2. Pursuant to the above order of this Court, the Chairman Airports Authority of India vide its order dated 22.10.99 appointed Shri A.K. Dubey, General Manager (Finance) as a sole Arbitrator to decide the aforesaid disputes and to make the award. The Arbitrator entered upon the reference and after giving due opportunities to the parties to present their respective cases and on a consideration of the documents and material more particularly the license Agreement gave a 'NIL' award thereby rejecting the claims of the petitioner based on the following findings:
' That the designated points as indicated vide Clause 1 (Annexure B) of the agreement do not find mention the flight catering units and thereforee the dispute raised by Claimant vide para 2 (a) above that the respondents failed to ensure supply of wet garbage from the flight kitchen units of Taj Air caterers, Oberoi flight services etc. is not tenable.
That the plea of the Claimants, that their offer dated 22.01.99 was conditional, does not corroborate with the conditions and clauses of signed contract, which in the eyes of Laws is the document to be relied upon. Clause 16 of the operating terms and conditions of the agreement which is the basic point of reference, also in no way makes it obligatory on the part of Respondents to ensure the availability of garbage from the flight kitchen as disputed by the Claimants. As the agreement clauses don't substantiate the plea of the Claimant, taking cognizance of anything other than the agreement on record would not classify as lawful conclusions.
That in terms of clause ix of para 2 of (duly accepted by claimant) award letter and clause 19 of the agreement, the contention of the Claimants brought out vide para 2 (a) above for any concessions on account of non availability of garbage in general, and from any specific source, is not sustainable and thereforee disallowed.
That in terms of clause ix of para 2 of (duly accepted by Claimant) award letter and clause 19 of the agreement, the contention of the Claimants brought out vide para 2 (b) above for any concessions on account of token system not operating up to their perceived expectations, is also not tenable and thereforee disallowed.
Moreover, Clause 21 of the agreement provided for determination of the contract by resorting to a notice of 90 days, which at no stage has been invoked by the Claimants. The Claimants have also failed to substantiate any losses suffered by them specifically on this account. thereforee, the Claimants are not entitled to any concessions towards the disputes raised by them as brought out at para 2(b) above.'
3. The designated points as indicated vide Clause 1 (Annexure B) of the agreement do not find mention about the flight catering units and thereforee the dispute raised by the Claimant vide para 2 (a) above that the respondents failed to ensure supply of wet garbage from the flight kitchen units of Taj Air caterers, Oberoi flight services etc. is not tenable. Clause 16 of the operating terms and conditions of the agreement which is the basic point of reference does not make it obligatory on the parts of the respondents to ensure the availability of the garbage from the flight kitchen. The plea of the claimants that their offer dated 22.1.99 was conditional was not corroborated with the conditions and clauses of the signed contract which is the only relevant documents to be relied upon.
The claimant has not resorted to the provisions of Clause 21 of the Agreement as it has not served him 90 days notice as contemplated in the said clause and the claimant has also failed to substantiate any losses suffered by them.
4. The award of the Arbitrator having been filed in the Court, parties were noticed and pursuant thereto, the petitioner has filed the present petition/objections under Section 34 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as the 'Act' ) challenging the award of the sole Arbitrator inter-alia on the grounds that the sole Arbitrator and his impugned award has overlooked the most material and germane provisions of the contract contained in Clause 15, 16 and 17 of the operating terms and conditions; it overlooked clause 2 (vi) of the letter of award dated 15.3.99 as also the letter dated 25.6.99 issued by the respondent and certain other documents and correspondence exchanged between the respondents and between the operators of the flight kitchens therein making certain admissions. The Arbitrator also overlooked the consensus reached between the respondents and operators of the flight kitchens in certain meetings which have held to resolve the dispute but their failure to adhere to those terms and acting contrary to the said decisions and assurances. The Arbitrator has also stated to have overlooked the ground realities and the existing terms in relation to the removal of the garbage from the designated indicated points as also the garbage of the flight kitchens. It is also alleged that the Arbitrator failed to appreciate that the offer of the petitioner to pay a sum of Rs.5,35,000/- as fee/license fee for removal of the garbage was subject to the condition that petitioner shall be entitled to the garbage deposited at the premises of the flight kitchens. The award is also assailed on the ground that it is irrational and suffers from unreasonableness and is otherwise vitiated due to the gross misreading of the material clauses and the material brought on record.
5. The respondent has opposed the objections and has filed a counter in the form of an affidavit of certain Shri N. Jay Kumar, Deputy General Manager (Commercial) of the respondent raising preliminary objections about the maintainability of the petition under Section 34 of the Act, which has a limited scope; the substance of the contention raised by the petitioner being outside the purview of the agreement and cannot be raised in order to challenge the award of the sole Arbitrator on merits. Various grounds on which the award is sought to be assailed have been controverter and it is denied that the sole Arbitrator has overlooked the material or germane provisions of the agreement or material on record in returning his findings or the award is otherwise vitiated on any other count.
6. I have heard Mr. Sandeep Sethi, learned counsel for the petitioner/objector and Shri Aruneshwar Gupta, learned counsel representing the respondent and have given my thoughtful consideration to their respective submissions.
7. Admittedly the Arbitration proceedings resorted to and the award given by the sole Arbitrator is under the provisions of 1996 Act and, thereforee, any objections to the award of the Arbitrator are necessarily to be dealt within the scope of Section 34 of the Act. The 1996 Act was enacted by the Parliament in place of 1940 Act with certain laudable objects. The primary object to this piece of legislation being the resolution of disputes between the parties by speedy and less expensive mechanism with the barest minimum intervention of the judicial forum. It is no longer debatable that the power to set aside the award of the Arbitrator is limited one under Section 34 of the 1996 Act as compared to the power and jurisdiction it exercised under Section 33 of the 1994 Act. The grounds on which the award could be set aside under 1940 Act were materially different than the grounds envisaged by Section 34 of the new Act. The scheme of Section 34 of the Act is not inconsonance with the basic scheme of the new Act e.g. is to limit the judicial intervention in the arbitral proceedings. Section 34 is a mandatory provision from which the parties can not derogate. This thrust lies in (a) Prohibition against any recourse against the award other than one provided for in such Section 1; (b) limiting the grounds on which the award can be assailed in sub Section 2; (c) Shorten the period of time within which the application for setting aside an award can be made and (d) providing for remission of award to the arbitral tribunal to procure the defects therein, if any.
8. In support of his contention that the objections filed by the petitioner against the Award are not tenable and fake under any of the grounds envisaged by Section 34 of the Act, learned counsel for the respondent-Airport Authority of India Ltd. has heavily relied upon the Supreme Court decision in the case of Smita Conductors Ltd. v. Euro Alloys Ltd. (2001) 7 SSC 728 and in the case of Olympus Superstructures (P) Ltd. Vs . Meena Vijay Khetan & Ors : [1999]3SCR490 . In the former case the Apex Court considered the meaning of the expression 'public policy' as appearing in Section 34(2)(b)(ii) of the Act and held that it means public policy of India and the Award passed in contravention of countries on public policy cannot be enforced. It reiterated the well-established proposition that if view of Arbitrator is plausible view and cannot be ruled out as impossible to accept, the Court cannot substitute its own view in its place. In the latter case the Supreme Court held that Arbitral Tribunal under the new Act is invested with the power to rule on its jurisdiction including ruling on any objection with respect to the existence or validity of the Arbitration Agreement and for that purpose, Arbitration Clause which forms part of the contract shall be treated as an agreement independent of other terms of the contract and any decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure fact, the validity of the arbitration clause. It also laid that under sub clause b (ii) of sub Section 2 of Section 34, the arbitral award may be set aside by the court if the Award deals with a dispute not contemplated by or not falling within the terms of submission to the Arbitrator or if it contains a decision on matters beyond the scope of the submission to arbitration. In the opinion of this Court none of these decisions is of any assistance to the respondent because the said judgments were rendered on the facts of those case and the grounds on which the Award of the Arbitrator is sought to be assailed in this Court were neither raised nor considered in those cases.
9. On the other hand Mr. Sandeep Sethi, learned counsel for the petitioner in support of his contention that the Award rendered by the sole arbitrator in the case in hand is against the public policy of India within the meaning of Section 34, 2 (b) (ii) of the Act has heavily relied upon the very recent decision of the Supreme Court in the case of Oil & Natural Gas Corporation Ltd v. Saw Pipes Ltd. 2003 (4) Sca 92. This judgment has comprehensively dwelt on the court's jurisdiction under Section 34 of the Act on the basis of which an Award of the Arbitrator can be set aside. In reference to the interpretation of Section 34(2)(b)(ii) the court held as to what is meant by the expression 'public policy' of India the court held as under:
' The terms 'public policy of India' is required to be interpreted in the context of the jurisdiction of the Court where the validity of award is challenged before it becomes final and executable. The concept of enforcement of the award after it becomes final is different and the jurisdiction of the Court at that stage could not limiter. Similar is the position with regard to the execution of a decree. It is settled law as well as it is provided under Code of Civil Procedure that once the decree has attained finality, in an execution proceeding, it may be challenged only on limited grounds such as the decree being without jurisdiction or nullity. But in a case where the judgment and decree is challenged before the Appellate Court or the Court exercising revisional jurisdiction, the jurisdiction of such Court would be wider. thereforee, in a case where the validity of award is challenged there is no necessity of giving a narrower meaning to the term 'public policy of India'. On the contrary, wider meaning is required to be given so that the 'patently illegal award' passed by the arbitral tribunal could be set aside. If narrow meaning is given, some of the provisions of the Arbitration Act would become nugatory.'
10. In para 15, of the judgment the Apex Court summed up that if the Award is contrary to the substantive provisions of law or the provisions of Act or against the terms of the contract, it would be patently illegal and could be interfered with under Section 34. From the above judgment it is manifest that the grounds set up by the petitioner in order to challenge the Award of the sole arbitrator more particularly the ground that the Arbitrator while construing the terms of the contract has overlooked certain germane provisions of the contract and operating conditions squarely falls within the ambit of Section 34 of the Act.
11. Now it is to be seen as to whether the named arbitrator has in fact overlooked/ignored or left out from consideration certain terms of the contract/operating conditions and if so to what consequence? Mr. Sethi, learned counsel for the petitioner/objector has referred to the license Agreement dated 8.7.99 executed between the parties as also correspondence exchanged between the parties during the relevant period from 7.12.98 to August 1999. It is pertinent to mention that in its offer dated 2.12.98 made to the respondent the petitioner has made it explicit that his offer for removal of the garbage on a license fee of Rs. 5,35,000/- for a period of fives years with a stipulation of 10% compound escalation was subject to the availability of wet garbage of Flight Kitchen Operators. The said offer was accepted by the respondent vide their letter dated 15.3.99. Of course clause (vi) of the said letter mentioned that the petitioner was required to collect the garbage from the designated points as detailed in 'Annexure (A) , as per the schedule attached to the agreement on daily basis but it s pertinent to take note that in the operating terms and conditions, more particularly clauses 15 and 17 of the said terms and conditions the petitioner was required to collect wet garbage comprising of left over food in the tray from the Flight Kitchen units on daily basis and to ensure that tarmac is not spoiled when dry garbage is collected at tarmac, the licensee was to collect/carry the same in covered trolleys instead of open passenger baggage trolleys. Reference may also be made to letter dated 25.6.1999 issued by the respondent to the plaintiff. The said letter is important and contents thereof are reproduced below:
AIRPORT AUTHORITY OF INDIA
(International Airports Division)
AAD/EST-268/Garbage/SHE/99/1158 June 25, 1999
M/s Shri Hans Enterprises
I-94 A, Gali No.9
Mahipalpur
New Delhi-110037
Subject: Removal of garbage from IGI Airport
Sir,
With reference to the subject contract awarded to you, you will adopt the following practice in respect of removal of garbage from IGI Airport:
(a) Token system will be introduced by you as being adopted by previous Licensee M/s Lovelin Enterprise.
(b) Airlines/hi-loaders off light kitchen can deposit their complete garbage comprising of wet, dry, cabin and galley garbage at the sorting point near sub-fire station-II. You will be required to issue the token to each hi-loader of flight kitchen/airline at the sorting point itself once the dry garbage is collected. The wet/dry/galley garbage will comprise of garbage disposed through trolley/left over and is taken directly in hi-loader of flight kitchens from the aircraft(s) to the flight kitchen units, all cabin garbage like disposed/broken plastic glasses, empty tin juice container, old newspapers etc. etc.
( c) You will be required to collect wet garbage comprising of left over fund in the tray from the flight kitchen units on daily basis and you will collect and carry dray/galley garbage in polythene bags.
(d) Any cutlery items, i.e. knife, fork, spoons etc. if found in the dray garbage will be required to be deposited by you to the respective/airlines/flight kitchen operators once in a month. In case any flight kitchen operators wishes to sort out its garbage, same will be allowed to be done at the sorting point itself.
2. You will also collect and remove the garbage from the designated points as well as flight kitchen units and dispose the same in the prescribed manner and there will be no separate contract for removal of the garbage by any other agency.
3.Under no circumstances for any reason you will hold or detain the hi-loader of flight kitchen contending that garbage has not been deposited.
4. You will also ensure that besides collection of garbage at designated sorting point near sub-fire station-II, all garbage which have been dumped at other designated points is removed on daily basis as per the frequency and directions of AAI and there is no cause of bird attractions of any sort on this accord.
Please acknowledge receipt.
Yours faithfully,
Sd/-
(H. C. Sachdeva)
Commercial Manager.'
12. A perusal of clauses (a) (c ) and clause 2 should leave no doubt that besides the removal of the garbage from the designated points the petitioner was also required to remove the garbage from flight kitchen units as well. This is followed by letter dated 28.6.99 issued by the petitioner to the General Managers of Air Taj Caterer, Oberoi Flight Service, Ambassador Flight Kitchen, Shefair Flight Kitchen, Indian Airlines (Stores & Purchase)-IGI Airport New Delhi, thereby asking the said flight kitchens to permit the removal of the wet garbage from their kitchens by the petitioner. The matter did not rest there and it would appear that once the petitioner was not allowed to remove the wet garbage by those flight kitchens, the petitioner replied to the respondent vide letter dated 15.7.99 and the respondent held a meeting with the DGM of above named flight kitchen and took the following decision.:
'During the meeting it was communicated to all the Flight Kitchen Operators that there are two kinds of garbage :- one is wet garbage and another is dry garbage. Dry garbage is normally lifted by AAI contractor at the tarmac. However, wet garbage which also include certain cutlery items and are reusable are taken to the respective flight kitchens and these items are sorted out there and the left over is required to be handed over to AAI Garbage Contractor. It was also pointed out during the meeting that there should be only one unified agency to lift garbage at the airport, because the responsibility of the bird hit est with AAI and not with any other agency. However, Flight Kitchen Operators put their own interpretations with regard to the definition of wet garbage which was not acceptable to AAI. After deliberations the Flight Kitchen Operators agreed to hand over the wet garbage to M/s Hans Enterprises.'
13 It appears that despite such decision and assurances there was no change in the position and contrary to the assurance the above named flight kitchen entered into agreements with other parties for the removal of the wet garbage from their flight kitchens on different license fees.
14. It appears that the approach of the Arbitrator to the whole issue has been myopic, focusing his entire attention to the terms of the contract dated 8.7.99 and the designated points appearing in Annexure 'A' totally ignoring the several clauses of the operating terms and conditions besides the fact that as per the respondents own showing the removal of wet garbage from the above named floor flight kitchen was also envisaged in the contract. The subsequent correspondence exchanged between the parties as also between the respondents and the operators of the flight kitchens and their efforts to ensure that the wet garbage and the flight engine was also handed over to the petitioner clearly indicated that the contract entered into between the parties envisaged the removal of the wet garbage flight kitchens.
15 In view of the foregoing, this Court is of the opinion that the Award of the sole arbitrator to the above effect was not based on true construction of the terms and conditions of the contract between the parties and correct appreciation of the material in as much as he has ignored the certain important clauses of the agreement while arriving at the said findings. In turn it would mean that the award rendered by the arbitrator is clearly in conflict with the public policy of India and thereforee, is liable to be set aside. As the claim of the petitioner for damages has been declined and a nill award given on the basis of incorrect construction of the contract between the parties, this Court is of the opinion that it is necessary in ends of justice if the Award is remitted back to the Arbitrator with the direction that the Arbitrator will read the contract between the parties as inclusive of a contract for removal of wet garbage from the four flight kitchens namely Air Taj Caterer, Oberoi Flight Service, Ambassador Flight Kitchen, Shefair Flight Kitchen, besides from the designated points as appearing in Annexure 'A' of the license Agreement dated 8.7.99. In the light of this, the Arbitrator will proceed further to enter the reference as directed by this Court vide order dated 14.10.99.