Lee Wan Shang vs Lee Thou Sen

S.N. Mallick, J.—The instant Revisional Application has been preferred by the claimant Petitioners against the judgment and Order dated May 20, 1992 passed by the learned Additional District Judge, 10th Court, Alipore, 24-Parganas (South) in Misc. Appeal No. 427 of 1990 thereby allowing the Misc. Appeal in part and modifying the Arbitrator''s award filed in T.S. 61 of 1986. It may be noted that the Misc. Appeal was preferred against the Order of the Assistant District Judge, 3rd Court, Alipore dated September 1, 1990 passed in Misc. Case No. 11 of 1989 u/s 33 of the Arbitration Act, 1940 whereby the learned Assistant District Judge dismissed the same.

The Petitioners filed an application u/s 33 of the Arbitration Act (hereinafter referred to as the Act) for setting aside the award passed by the arbitrator Shri Profulla Kumar Roy filed in Court below on August 12, 1988 and opened on February 21, 1989 on the ground of that the arbitrator misconducted himself and the proceedings. Various allegations were levelled against the arbitrator in the aforesaid application by the Petitioners as instances of his misconduct. The learned Trial Court dismissed the application u/s 33 of the Act on the ground that it was barred by limitation and that in the said application -

''assessment, re-examination or re-assessing the materials is being called for by the present Petitioners which is not permissible. The learned TriaJ Court further observed as follows: The grounds in a nutshell is not convincing nor it comes within the periphery of Section. 33 of the Act. Under the above facts and circumstances and in view of my foregoing discussions it is opined that the grounds so mentioned in the Misc. case is not tenable either in law or in facts and is subject to dismissal''.

The Appeal Court in the impugned order has disagreed with the Trial Court on the point of limitation and has found after consideration of materials on record that the application u/s 33 is not barred by limitation. The Appeal Court has also found while discussing point No. 2 regarding misconduct of the arbitrator that the arbitrator is not guilty of misconduct. But, he has modified the award u/s 15 of the Act and has raised the total amount receivable by the Petitioners-Appellants to Rs. 3,64, 413. 00 from Rs. 2,48,970.50 p. as awarded in his favour by the arbitrator in his award. The learned Appeal Court has considered the objections taken on behalf of the Appellant-Petitioners and also the submissions made on behalf .of. the Respondent opposite parties. It appears from the impugned order that the award was challenged before the Appeal Court on behalf of the Petitioners on the ground that the arbitrator was not expert in tannery business and as such he could not effectively divide the same into two halves, that the arbitrator failed to consider the minutes of the proceedings held on July 24, 1988 wherein the Petitioner-Plaintiffs stated that they were ready and willing to pay Rs. 5,00,000.00 to the Respondents, that the arbitrator did not consider the valuation report submitted on behalf of the Petitioner, that he assessed the valuation of the firm whimsically and that the arbitrator went beyond reference and as such he is guilty of misconduct. The learned Appeal Court after considering the materials on record and a hearing the submissions of both the parties came to a finding that while passing the award the arbitrator committed an obvious error by relying on the valuation of the assets of the firm as it stood on March 31, 1984 while the award was passed or signed on October 10, 1988. The learned Appeal Court taking into consideration the rise in valuation of the assets at the time of the award raised the total amount receivable by the Appellant-Petitioners to Rs. 3,64,413.00 thereby modifying the award. In the instant Revisional Application the Petitioners have challenged the impugned order on very many grounds including the grounds taken before the courts below. It may be pointed out that in the application u/s 33 of the Arbitration Act for setting aside the award, although very many grounds have been taken, but no where it has been specifically stated by the Petitioners that the arbitrator has misconducted himself or the proceedings. Any way, even if it is not stated, the Court is to consider whether such grounds or allegations made against the arbitrator amount to misconduct for the purpose of setting aside the award filed by him.

Before I go into the merits of the application some admitted facts on record may be noted for the purpose of proper appreciation of the instant application.

The present Petitioners filed T.S. 61 of 1986 in the 3rd Court of the Assistant District Judge, Alipore on March 22, 1986 against the present Defendant-opposite parties. The prayers were, inter alia, for a declaration that they were partners of the firm M/s. Kim Wah Tannery lying at 86/C/1 Matheswartala Road with 50% share of the assets profits etc. of the said firm, that the said firm be dissolved on and from April 1, 1984 or in the alternative the said partnership business might be dissolved by the order of the Court and for accounts and other consequential reliefs. In connection with certain proceeding in the aforesaid title suit, a Revisional Application was filed before this High Court on July 21, 1987 being numbered as CO. 1562 of 1987 which was, however, dismissed on compromise on the basis of the terms of settlement made between the parties and filed in Court. By the terms of settlement (annexure B to the instant application) Shri P.K. Roy, the learned Advocate for the present Opposite parties was appointed as the sole arbitrator in respect of the partnership business Kim Wah Tannery lying at 86/C/1, Matheswartala Road in the suburba of Calcutta for settlement of dispute which is the subject matter of Title Suit No. (51 of 1986 now pending before the learned 3rd Assistant District Judge, Alipore 24-Parganas. On August 4, 1987 the arbitrator Mr. P.K. Roy entered into the above reference and held all together nineteen sittings from August 8, 1987 to July 24, 1988. The leaned arbitrator thereafter passed and signed the award on August 10, 1988 and filed the same in Court on August 12, 1988. After going through the materials produced before him and after hearing all the parties concerned the arbitrator in his award assessed the claim of the Petitioners on Rs. 2,48,970.50 p. and directed that on payment of such amount the Respondent-opposite parties would be entitled to retain the possession of the tannery business with other liabilities. As I have already noted, on March 17, 1989 the present Petitioners filed an application u/s 33 of the Arbitration Act before the Trial Court which was registered as Misc. Case No. 11 of 1989. The said Misc. Case was dismissed by the learned Trial Court on September 1, 1990. In Misc. Appeal the learned Additional District Judge by his impugned order allowed the appeal in part modifying the -award and raised the claim of the Petitioners at Rs. 3,64,413.00.

In the instant Revisional Application u/s 115 of the CPC filed by. the Petitioners it is to be seen if by passing the impugned order the Appellate Court has acted in the manner as specified in Clause (a) or (b) or (c) of Section 115 and also if the impugned order is hit by Clause (a) or (b) of the proviso to Section 115. In other words, it is to be seen in our present case while passing the impugned order the Appeal Court concerned appears to have exercised a jurisdiction not vested in it by law or to have failed to exercise a jurisdiction so vested, or to have acted in the exercise of this jurisdiction illegally or with material irregularity. At the same time it has also to be seen, before High Court exercises its jurisdiction u/s 115 that the impugned order if it had been made in favour of the party applying for revision would have finally disposed of the suit or other proceeding or the order, if allowed to stand, would occasion a failure of justice, or cause irreparable injury to the party against whom it was made.

At the beginning Shri Sen appearing for the opposite parties has contended that the impugned order does not call for any interfering of this Court u/s 115 of the Code of Civil Procedure. In this connection he has referred to a decision of the Supreme Court D.L.F., Housing and Construction Company (P.) Ltd., New Delhi Vs. Sarup Singh and Others, (per Dua, J.) wherein the position has been made clear. It would be helpful to quote the observations of the Supreme Court in this regard:

The position thus seems is to be firndy established that while exercising the jurisdiction u/s 115, it is not competent to the High Court to correct errors of fact, however, gross or even errors of law unless the said errors have relation to the jurisdiction of the Court to try the dispute itself. **** Clause (c) also does not seem to apply to the case in hand. The words ''illegally'' and ''with material irregularity'' as used in this clause do not cover either errors of fact or of law ; they do not refer to the decision arrived at but merely to the manner in which it is reached. The errors contemplated by this Clause may in my view relate either to breach of some provision of law or to material defects of proceedure, affecting the ultimate decision and not to errors either of fact after the prescribed formalities have been complied with.

There being no dispute in this regard further consideration of the question would be too academic for our purpose and as such it is not developed further.

The question is whether the Appellate Court passing the impugned order has committed any jurisdictional error or has acted illegally or with material irregularity resulting in failure of justice or occassioning an irreparable loss to the Petitioners. The Petitioners filed a case u/s 33 of the Arbitration Act for setting aside the award on ground of misconduct which was rejected by the Trial Court and also by the Appellate Court which, however, modified the award in favour of the Petitioners. The law on the point of interference by the High Court in connection with an award is well settled. In a case of Shambhu Dayal and Others Vs. Pt. Basdeo Sahai, (per Gangeshwar Prasad, J. for majority). The majority decision of the Full Court is as follows:

An award is not liable to be set aside on the ground of the arbitrator''s omission to perform a certain impossible task which he had undertaken to perform. An award is also not liable to be set aside on the ground of the arbitrator''s omission deliberate or by oversight, to decide a matter which could not in any manner affect the ultimate actual decision of the dispute referred to arbitrattion. It may be that the matter omitted from decision could in the context of a certain finding, if given by the arbitrator, may assume importance and can have a vital bearing on the ultimate decision ; but that would not invalidate the award if on the findings actually given by the arbitrator the omission becomes wholly immaterial.

It has been also held there that if a Court omits to consider a material on record having a bearing on the question to be decided by it or fails to apply its mind to or to record a finding on a crucial aspect of the case which cannot be ignored in the determination of the controversy before the Court, it certainly acts illegally or at least with material irregularity in the exercise of its jurisdiction making such order open to revision u/s 115 of the Code. !n a case Continental Construction Co. Ltd. Vs. State of Madhya Pradesh, (per Sabyasachi Mukharji, J.), it has been held by the Supreme Court that an arbitrator is not a conciliator and cannot ignore the law or misapply rt in order to do what he thinks is just and reasonable and that the arbitrator is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply the law, and if he does not he can be set right by the Court provided his error appears on the face of the award. In another case Gujarat Water Supply and Sewerage Board Vs. Unique Erectors (Gujarat) (P) Ltd. and Another, (per Sabyasachi Mukharji, J.) it has been held by the Supreme Court that reasonableness as such of an award unless the award is per se preposterous or absurd is not a matter for the Court to consider and that appraisement of evidence by the arbitrator is ordinarily not a matter for consideration of the Court. The Supreme Court has said in the aforesaid case that it is difficult to give the exact definition of the word ''reasonable'' because reason varies in its conclussions according to parameters used'' and the Supreme Court is of the view that the word ''reasonable'' has in law prima facie meaning of reasonable in regard to those circumstances of which the actor, called upon to act reasonably, knows or ought to know. In a case reported in K.P. Poulose Vs. State of Kerala and Another, (per Goswami, J.) the Supreme Court has held that misconduct u/s 30(a) of the Act has not a connotation of moral lapse and that it comprises legal misconduct which is complete if the arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and f AIR decision. In a recent decision of State of U.P. v. Ram Nath International Ooust Pvt. Ltd. AIR 1996 S.C. 1782 at pp. 784-785, para. 7 (per Pattanaik, J.) the Supreme Court has observed as follows:

The jurisdiction of the Court to interfere with an award of an arbitrator is undoubtedly a limited one. The adjudication of the arbitrator is generally binding between the parties and it is not open to the Court to attempt to probe the mental process by which the arbitrator has reached his conclusion. Award of an arbitrator can be set aside by a Court only on the grounds indicated in Section 30 of the Arbitration Act. It is not open to the Court to reassess the evidence to find whether arbitrator has committed any error or to decide the questions of acequacy of evidence and the Court cannot sit on the conclusion of the arbitrator by re-examining and reappreciating the evidence considered by the arbitrator. At the same time the arbitrator is a creature of the agreement itself and therefore is duty bound to enforce the terms of the agreement and cannot adjudicate a matter beyond the agreement itself. If the arbitrator adjudicates a claim of a contractor with reference to the clauses of the agreement itself whereby the agreement gets engrafted into the award, it will be open to the Court to examine those clauses of the agreement and find out the correctness of the conclusions of the arbitrator with reference to those clauses.

In an earlier case of Puri Construction Pvt. Ltd. Vs. Union of India (UOI), (per Sharma, J.) the Supreme Court''s view is that when a Court is called upon to decide the objections raised by a party against an arbitration award, the jurisdiction of the Court is limited, as expressiy indicated in the Act, and it has no jurisdiction to sit in appeal and examine the correctness of the award on merits, in another case Food Corporation of India Vs. M/s. Veshno Rice Millers, (per, Sabyasachi Mukharji, J-) the Supreme Court has laid down that it is not misconduct on the part of an arbitrator to come to an erroneous decision, whether his error Is one of fact or law, and whether or not his findings of fact are his evidence. In the said case the Supreme Court has further clarified that it is not necessary for a Court to examine the merits of the award with reference to the materials produced before the arbitrator and that the Court cannot sit in appeal over the views of the arbitrator by re-examining and reassessing the materials. In another case Sudarsan Trading Co. Vs. Government of Kerala and Another, (per Sabyasachi Mukharji, J.) the Supreme Court has made it clear that 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. The Supreme Court has concluded there that the High Court, therefore, had no jurisdiction to examine the different items awarded clause by clause by the arbitrator and to hold that under the contract these were not sustainable in the facts found by the arbitrator.

Keeping the above legal principles in the background it is to be seen whether in the instant case this High Court should interfere u/s 115 of the CPC thereby ultimately interfering with the award which has been accepted by both the Courts below. It has been submitted by the learned Advocate appearing for the Petitioner that the learned Trial Court and the learned Appeal Court in its impugned order have not considered the allegation of misconduct levelled against the arbitrator in passing the award. The Trial Court''s Order cannot be challenged before this High Court u/s 115 of the CPC as this being an appealable order has marged with the impugned order passed by the Appeal Court. But, I have gone through the Trial Court''s order the relevant portion of which I have already quoted. The Trial Court is of the view that the allegations made in the application u/s 33 of the Arbitration Act in fact, ask for the Court''s assessment, re-examination or reassessing the materials considered by the arbitrator which is not permissible. Before the Appeal Court the objections which were taken or urged against the award or the arbitrator have already been described in earlier paragraph of my Judgment. In the application u/s 33 of the Act many objections were taken but it appears from the impugned order that only a few were pressed. It has been urged before the Appeal Court that the arbitrator was wrong in holding that the tannery business could not be partitioned and that as such the arbitrator misconducted himself. Whether the partnership business could be partitioned or not is a question of fact and the learned arbitrator after going through the materials produced before him and after making inspection of the tannery has come to a factual decision. This was considered by the Appeal Court while arriving to a finding that there was no misconduct on the part of the arbitrator in passing the award. This question of fact in my view cannot be agitated once again before this High Court in revisional jurisdiction in view of the legal principles have already discussed. The second point urged before the First Appeal Court and before this High Court on behalf of the Petitioners is that the arbitrator did not consider the proposal of the Petitioner made on July 24, 1988 that they were ready and willing to pay Rs. 5,00,000.00 to the Respondent. This is also a question of fact which cannot be agitated before this High Court in Section 115 of the Code. Furthermore, from the minutes of the proceedings held On July 24, 1988 (vide page 89 of the arbitration proceedings annexed to the supplimentary affidavit) it appears that the learned Advocate appearing for the present Petitioners suggested that his client was agreeable and ready to pay Rs. 5,00,O Ot3.00 in case he was allowed to retain the business with all its liabilities except the claim of Mrs. Lee Fung Chao. it was only a suggestion and the arbitrator directed the learned Advocate to submit the said statement on August 2, 1988. It does not appear if any such frangible statement was produced before the arbitrator by the Petitioner on August 2, 1988. In this position I am unable to accept the contention of the learned Advocate appearing for the Petitioner that such non-consideration of the above suggestion amounts to a misconduct on the part of the arbitrator. It was also urged before the Appeal Court and before this Court on behalf of.the Petitioner that the valuation reached by the arbitrator is whimsical. It appears that the learned Appeal Court after going through the materials on record raised the valuation and modified the award thereby re-assessed amount reasonable by the Petitioners at Rs. 3,64,413.00. In this position as the Appeal Court has modified the award u/s 115 of the Act no allegation of misconduct can stand against the arbitrator. It has been contended before me by Mr. Dey the learned Advocate appearing for the Petitioners that the Appeal Court had acted illegally by modifying the award by its impugned order. I am unable to accept this contention as the learned Appeal Court has given lawful reasons for modifying the award and there is no reason for this Court to interfere with that finding. Another point urged before the Appeal Court and before this High Court is that the learned arbitrator while passing the award has gone beyond his terms of reference. S have already referred to the terms of reference in the earlier paragraph of my Judgment. I have gone through the impugned order and there is nothing to show that the learned arbitrator has gone beyond the terms of reference. For the sake of convenience it may, however, be recalled that the arbitrator was appointed in respect of the admitted partnership business of the parties under the name Kim Wah Tannery lying at 86/C/1 Matheswartala Road for settlement of disputes which is the subject matter of the Title Suit No. 61 of 1986. It appears from the impugned order that the learned arbitrator took into consideration the partnership deed and the* materials produced him for settlement of disputes made in the above Title Suit. He has come to a finding that it was a partnership business and as prayed by the Plaintiff-Petitioners in the plaint of the aforesaid Title Suit, he declared the partnership firm dissolved w.e.f. April 1, 1984. In that view of the matter there is nothing to show that the arbitrator has gone beyond the terms of reference. In view of the above facts and circumstances on record and considering the legal position in this regard I am of the view that the learned Appeal Court has rightly held that on the allegations made before him the arbitrator is not guilty of misconduct. Another contention of Shri Dey before me is that the arbitrator was not definite about the area of the tannery and that in one place he has held it to be 10 cottahs area and it in another place he has held to be 8 cottahs in area. This discripency is a minor one and as such is not worth considering to prove whether the arbitrator has misconducted himself. Shri Dey has also submitted before this Court that the finding of the arbitrator that the tannery business covering an area of 8 cottahs could not be effectively divided into two halves and that as such he was giving it to the opposite party. This is also a finding of fact which cannot be looked into by this High Court in revisional jurisdiction. Mr. Dey has also challenged the valuation of the assets made by the arbitrator. It appears that the arbitrator made the valuation on the basis of the last balance-sheet of the firm standing on March 31, 1984. It may also be remembered that the Appeal Court has raised the valuation making the basis on the date of the award. In this position the objection taken by Mr. Dey must be rejected. Mr. Dey has further* contended that the reasons given by the arbitrator in alloting the tannery business to the opposite parties are biased and improper. I have gone through the impugned order and have considered the reasonings given by the arbitrator in coming to such a decision. This is also a question of fact and should not be re-opened by this High Court by way of re-assessment of evidence. Furthermore, the fact that Shri P.K. Roy a retired District and Sessions Judge practising as an advocate of this High Court was appearing for the opposite parties in connection with another case viz. CO. 1562 of 1987 was known to the Petitioners from before. Even with this knowledge both the parties agreed to appoint Shri Roy as their sole arbitrator. In this position no such objection of bias can be taken at this''stage. It may also be noted that against the arbitrator no application was filed before the Trial Court for his removal on ground of misconduct or bias. Furthermore from the award and minutes of the proceedings it does not appear that the arbitrator acted malafide or with any bias against any of the parties. This objection was also not taken before the Appeal Court as it appears from the impugned order. There has been an allegation of misappropriation of funds by the opposite parties before the Arbitrator which the arbitrator has negetived in his award. Mr. Dey has tried to reagitate this matter before this High Court which in my opinion he cannot do under law because the same is a question of fact which has been decided by the arbitrator. In view of the above facts and circumstances and the materials on record and in view of the settle law in this regard as discussed above I do not find any reason to hold that the Appeal Court by passing the impugned order has committed any jurisdictional error as contemplated in Clause (a) and (b) of Section 115 or that he has acted in the exercise of its jurisdiction illegally or with material irregularity as contemplated in Clause (c) to Section 115 of the CPC and that the impugned order if allowed to stand would failure of justice or cause irreparable injury to the present Petitioners. Accordingly the Revisional Application is dismissed. All interim orders are vacated. No order as to costs.