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TMI Blog2017 (2) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... 16, 1991. PCL had further sub-contracted the said work or part thereof to the appellant herein, i.e. M/s. Sharma & Associates Contractors (P) Ltd. (SAPL). This appeal relates to disputes between SAPL (the appellant) and PCL (the respondent). Though, work was sub-contracted to the appellant, it is an admitted case between the parties that the sub-contracting of the work was not permissible by the respondent to the appellant. Be that as it may, a contract dated February 09, 1990 was signed between the appellant and the respondent (even prior to the award of work by HSCL to the respondent), though it was sealed on April 15, 1992, i.e., after the respondent was awarded the sub-contract from HSCL on July 16, 1991. From the facts recorded upto now, it is clear that there is a main contract between the employer NHPC and HSCL which is dated January 28, 1996 and HSCL sub-contracted the work to PCL and contract between them is dated July 16, 1991, third contract which is between PCL (the respondent) and SAPL (the appellant) is dated February 09, 1990, sealed on April 15, 1992. 2) Disputes arose between the appellant and the respondent in respect of execution of the work. According to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of Rs. 19,38,357/- against Claim No. 1 and the aforesaid approach was accepted by the learned Single Judge. 4) We may state here the basis on which this claim was allowed. Taking into consideration certain correspondence exchanged between the parties as well as between PCL and HSCL. In the sub-contract that was awarded by HSCL to the respondent certain pre-contractual documents were incorporated specifically, in Clause 2 of the said sub-contract. That correspondence indicates that if NHPC was to agree to execution of Item No. 1 at a rate of Rs. 30 Cubic Metre (cum) or more against HSCL's claim of Rs. 40 cubic metre then respondent would be agreeable to execution of job on HSCL's tendered rate subject to retention of the 5% of the proceeds by HSCL. Thus, at the time of entering into the contract between HSCL and the respondent, sum negotiations were going on between HSCL and the employer, i.e., NHPC for revision of the rates and respondent had indicated that once the said rates are revised benefit thereof shall be given to the respondent. In one of the letters dated February, 1990 issued by PCL to HSCL, which was incorporated in the contract, the aforesaid demand of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. Therefore, the moot question is as to whether the principle of incorporation would enter into and extend to this sub-contract as well in the absence of any clause of back to back contract appearing in the contract that was signed between the appellant and the respondent. 8) The High Court in the impugned judgment has answered the aforesaid question in the negative, and rightly so. As noted above, contract executed between HSCL and the respondent was proceeded by correspondent exchange between the said parties. There was a clear understanding between them that in case HSCL is able to get extra payment in respect of item Nos.1 and 2, HSCL had to pass on the said benefit to the respondent after retaining 5% of the enhanced amount so received. However, there was no such stipulation in the contract entered into between the appellant and the respondent. Entire thrust in the argument of the learned counsel for the appellant before us was that there was back to back contract as according to him the aforesaid stipulations contained in a contract between HSCL and the respondent stood incorporated in the contract entered into between the appellant and the respondent as well. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. S.B. Upadhyay, learned senior counsel that after going through the various agreements, the arbitrator had formed an opinion and it was not permissible for the High Court to set aside the said award by substituting its own view in place of the view of the arbitrator as the High Court is not a court of appeal. Thus, it was also not permissible for the High Court to reappraise the evidence while examining the objections, i.e., different contracts in coming to the conclusion that the contract between the appellant and the respondent was not on back to back basis. In support, the learned counsel referred to the following judgments of this Court: (i) B.V. Radha Krishna v. Sponge Iron India Ltd.( (1997) 4 SCC 693) "11. The disposal of the matter by the High Court in the manner shown above does not come within the ambit of Section 30 of the Arbitration Act. This Court, time and again, has pointed out the scope and ambit of Section 30 of the Act. In State of Rajasthan v. Puri Construction Co. Ltd. [(1994) 6 SCC 485] after referring to decisions of this Court as well as English cases, the Court observed as follows: (SCC p. 492, para 12) "On the scope and ambit of the power of interf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrator." (ii) Ispat Engineering & Foundry Works v. Steel Authority of India Ltd.( (2001) 6 SCC 347) "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 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 Balloo Spg. & Wvg. Co. Ltd. [AIR 1923 PC 66 : 1923 AC 480], Union of India v. Bungo Steel Furniture (P) Ltd. [AIR 1967 SC 1032 : (1967) 1 SCR 324], N. Chellappan v. Secy., Kerala SEB [(1975) 1 SCC 289], Sudarsan Trading Co. v. Govt. of Kerala [(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 [(1999) 5 SCC 651] has stated that reappraisal of evidence by the court is not permissible and as a matter of fact, exercise of power to reappraise the evidence is unknown to a proceeding under Section 30 of the Arbitration Act. This Court in Arosan Enterprises [(1999) 9 SCC 449] categorically stated that in the event of there being no reason i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the arbitrator had committed an error in coming to the conclusion that the appellant was entitled to the claim of the escalated price of the commodity (hard coke) under the terms of the agreement and the Division Bench felt that the conclusion should have been otherwise, it was not open to it to interfere with the award on that score..." 10) There is no quarrel about the principle of law mentioned in the aforesaid judgments. However, when it is found that claim was entertained by the learned arbitrator on the basis of provisions in the contract entered into between HSCL and the respondent and said provisions were not made applicable in the contract which was entered into between the appellant and the respondent, the approach of the learned arbitrator is clearly perverse in justifying the claim on the basis of provisions which were not even applicable. Whether contract entered into between the HSCL and the respondent governed the relationship between the appellant and the respondent was a fundamental and jurisdictional issue and such an exercise is permissible by the Court while examining the validity of an award. Undertaking this exercise did not amount to appraising the evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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