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Judgment
The Court : It must be recorded at the outset that one of us (Sanjib Banerjee, J.) had declined to hear the challenge to the arbitral award when sitting singly on personal grounds; but at the invitation of the parties here, the matter is taken up by this Bench.
In view of the good grounds shown, the marginal delay in preferring the appeal is condoned.
The substance of the challenge to the arbitral award is that the award is founded on an agreement between the parties which provided for a manner of payment of the award-holder's dues, subject to the resolution of a dispute pertaining to man-hours that had been raised by the appellant herein. It is the contention of the appellant that only that part which provided for the payment to the award-holder has been noticed in the arbitral award dated December 15, 2012 and the other clauses of the same agreement as reflected in the minutes of a meeting held between the parties on December 19/20, 2001 were not even recognised in the award.
The matter pertains to the erection and commissioning of the appellant's plant at Haldia. The respondent was commissioned for the work and by 2001 the respondent had raised bills of value in excess of Rs.20 crore and it is the undeniable position that the financial crisis faced by the appellant herein was cited by the appellant to delay the payment. For a long time the respondent waited to receive its dues. Finally by or about the end of December, 2001, the parties agreed to substantial interest being paid by the appellant on account of the outstanding dues and the agreement or settlement as recorded in the minutes also provided for a resolution of the dispute raised by the appellant to the extent of Rs.5.50 crore on account of excessive man-hours billed for by the respondent. Clauses 4.5 and 4.6 of the minutes of the meeting held on December 19/20, 2001, which are not reflected in the impugned arbitral award and have been emphasised on by the appellant, provide as follows:-
"4.5 As a part of Package settlement, M/s. HPL insisted that they would reduce the total payments to EIL on calculation as above by Rs.5.50 Crores as on 31st December, 2001.4.6 Due and drawn statement on the proceeds of this Package shall be finalised by EIL and HPL on priority and latest by 31st Jan.2002."
The appellant refers to several documents pre-dating the meeting of December 19/20, 2001 to demonstrate that the dispute pertaining to man-hours was a live issue and had always been insisted upon by the appellant. It is irrelevant to look at the previous documents since the meeting of December 19/20, 2001 recognised the issue to be live. Subsequent to such meeting, however, a statement was drawn by the respondent herein detailing all the bills and the particulars thereof, which appears as a chart at page 302 of the appeal papers. Such chart was prepared by or about January 16, 2002 and the chart is referred to in the arbitral award as Exhibit-C-6.
The arbitral tribunal referred to the chart, which was signed by the parties, and observed as follows at page 24 of the award:
"... The officials of both parties had signed the Exhibit C-6 on 16th January, 2002. While it is true these endorsements did not expressly state that thereby HPL was accepting the correctness of Exhibit C-6 or that the man hours spent were being admitted ... surrounding facts and the conduct of HPL clearly establish that the respondent had admitted the contents of this statement (Exhibit C-6)."
It is evident, therefore, that notwithstanding the issue pertaining to man- hours being a live issue till the end of December, 2001, upon the detailed chart being produced and the parties accepting the same, no reservation was entered by the appellant herein regarding the contents of such chart nor was any reference made to the dispute pertaining to man-hours while signing the document. Elsewhere, the award refers to the subsequent conduct of the appellant and the fact that such subsequent conduct, according to the arbitral tribunal, amounted to the dispute pertaining to the man-hours being abandoned by the appellant herein.
However, the most important document in such regard is one dated January 30, 2002 which has been cited by the appellant in course of its submission in this appeal. The document is a covering letter for the first instalment of Rs.10 crore being paid in terms of the proposed pay-out as recorded in the minutes of the said meeting of December 19/20, 2001. The letter indicates the gross payment, the quantum of tax deducted at source and the net amount paid. Conspicuous in its absence in the said letter is any reservation on the part of the appellant herein pertaining to its dispute relating to the man-hours or the amount of Rs.5.50 crore as previously claimed on account of excessive man-hours and recorded in clause 4.5 of the minutes of the meeting held on December 19/20, 2001.
It is true that when an award or an order is made on the basis of an admission of one of the parties, the entirety of the circumstances in which the admission was made has to be taken into account and only a part of the document cannot be culled out for it to be held against the maker. If the award was based merely on the minutes of the meeting held on December 19/20, 2001, it may not have passed muster, since the payment promised to be made in terms of the earlier clauses by the appellant herein was qualified by the reservation as recorded in clauses 4.5 and 4.6 thereof. However, the subsequent conduct of the appellant as evident from its unreserved signing of the detailed chart on January 16, 2002 and its letter of January 30, 2002 lends support to the arbitral tribunal's understanding that the appellant herein had abandoned the dispute at such stage and had accepted its liability in terms of the payment terms as indicated in the minutes of the meeting held on December 19/20, 2001.
The appellant has also referred to an interim award that had been passed by the tribunal upon the respondent herein citing a TDS certificate indicating that the appellant had accepted that the total pay-out to the respondent would be to the extent of about Rs.20.50 crore. The contention of the appellant is that in the arbitral tribunal not accepting the respondent's contention that an interim award for the entire amount as shown to be credited to the respondent ought to be made, it was implicit that the dispute as to the man-hours was still alive. The interim award was made long after January 30, 2002.
The interim award of April 25, 2010 has to be read in the context of the payments promised to be made by the appellant and not in the context of what the appellant admitted its entire extent of liability to be. At the time that the application for interim award was made, a sum of about Rs.5 crore fell due in terms of the agreement and terms of payment recorded in the minutes of the meeting held on December 19/20, 2001 and, accordingly, the arbitral tribunal noticed that since a sum of Rs.1 crore out of the amount due of Rs.5 crore had been tendered by then, there was a need for making an interim award for the balance Rs.4 crore. Nothing more can be read into the interim award or the quantum awarded thereby.
The appellant has referred to a judgment reported at (2015) 3 SCC 49 for the proposition that an arbitral award may also be set aside if it shocks the conscience of the Court. The appellant submits that since the arbitral award noticed only the liability of the appellant herein as recorded in the minutes of the meeting held on December 19/20, 2001 and ignored the dispute as enumerated in clauses 4.5 and 4.6 of the minutes, it should shock the conscience of the Court and the award should be annulled. The appellant has also referred to a judgment reported at AIR 1993 SC 352 and has placed paragraph 10 thereof for the proposition that a party cannot approbate and reprobate and seek to take advantage of a document on one aspect while contending that the document may be void for other purposes.
The assessment in the present case is based purely on the arbitral award and the interpretation of the documents and the conduct of the parties as evident therefrom. If the arbitral tribunal had not referred to the dispute pertaining to man-hours while referring to the payment terms as indicated in the minutes of the Meeting held on December 19/20, 2001, the Court may have paid greater attention before allowing the award to pass. However, after setting out the payment clauses as recorded in the minutes of the meeting held on December 19/20, 2001, the arbitral tribunal discussed the issue as to man-hours in great detail; referred to the signature on behalf of the appellant appended to the Exhibit C-6; and, took cognizance of the subsequent conduct of the appellant which implied that the deduction on account of man-hours was no longer being pursued. It was possible, in the state of facts and the evidence before the arbitral tribunal, to arrive at such conclusion and it is elementary that in exercising the jurisdiction under Section 34 of the Arbitration and Conciliation Act of 1996, the Court scarcely sits in judgment over the arbitral award. Not only does the award, and the treatment of the issue pertaining to excessive billing for man-hours, not shock the conscience of the Court; but it also appears that the view taken by the arbitral tribunal was possible: and may even have been the most appropriate.
The other aspect canvassed by the appellant that the respondent herein or the arbitral tribunal could not have relied on one part of the minutes and not on the other part, has been dealt with more fully in the preceding paragraphs. At the point of time that the arbitral award was rendered, the conduct of the appellant subsequent to December 19/20, 2001 rendered clauses 4.5 and 4.6 meaningless and irrelevant. It is in such light that the award must be seen and it is for such reason that only the relevant clauses of what remained subsisting from the minutes of the meeting dated December 19/20, 2001 have been quoted in the award and the remainder excluded.
The challenge to the award has been rightly repelled by the Court of the first instance. The additional grounds urged do not impress and, accordingly, APO No.370 of 2018 is dismissed.
GA No. 3203 of 2018 is disposed of.
There will be no order as to costs.