TMI Blog2019 (6) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... en taken, the High Court is not justified in interfering with the interpretation made by the arbitrator which as observed was possible and plausible. Therefore, in the facts and circumstances of the case, we are of the opinion that the High Court has clearly exceeded in its jurisdiction in interfering with the award passed by the learned arbitrator with respect to claim no.1 price adjustment/escalation - the impugned judgment and order passed by the High Court for quashing and setting aside the award passed by the learned arbitrator with respect to claim no.1 price adjustment/escalation cannot be sustained and the same deserves to be quashed and set aside. Fixed costs - an amount of ₹ 78 crores awarded by the learned arbitrator with respect to compensation of loss - HELD THAT:- Having gone through the relevant material on record, we are of the opinion that the High Court has rightly set aside the award passed by the learned arbitrator with respect to claim no.2. Except the CA s certificate, no further evidence had been led with respect to actual loss. Considering the material on record, it is on the contrary found that in the relevant year the quantity of the coal lift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enterprises Limited (AEL) submitted a bid which was accepted on 12.05.2006. A Letter of Intent was issued to AEL by the respondent on 23.10.2006. Respondent and AEL entered into a joint venture, namely, Parsa Kente Collieries Limited, the appellant herein. A Coal Mining Service Agreement was entered into between the said Parsa Kente Collieries Limited and AEL. That a Coal Mining and Delivery Agreement (hereinafter referred to as CMDA ) was executed between the appellant and the respondent on 16.07.2008 for supply of coal. 2.1 As per CMDA, the date of commencement of the contract was 25.06.2011. As per CMDA between the appellant and the respondent, the coal supply was to commence at the earliest within 42 months, or within 48 months from the date of allotment of coal blocks, i.e., by 25.06.2011. CMDA also provided a clause for extending the date of commencement. Clause 3.2.1 of the CMDA provided for scope of work; Clause 4.1.3 and 4.1.4 provided for responsibility of the respondent to inform the appellant as regards the requirement of coal in advance. Clause 4.5 provided for commencement of the date; clause 5.1 provided for contract of price; clause 5.2.2. provided for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at therefore the appellant is entitled to compensation as claimed for ₹ 78 crores. 2.4 That while allowing the claim with respect to Escrow Account , the learned Arbitrator held that the undertaking given by the appellant was limited to a contingency where on account of failure of completion of mine closure activity by the appellant led to the forfeiture of any amount deposited in the escrow account, the respondent would be entitled to recover the same from the monthly running bills of the appellant. The learned Arbitrator observed, however, as no such occasion has arisen, the question of any deduction on the said count does not arise. Consequently, the learned Arbitrator directed the respondent to return that amount which was lying in the escrow account which was deducted from the monthly running bills of the appellant. 2.5 As observed hereinabove, the learned Arbitrator rejected claim no.4, namely, under the head Construction of Railway Siding . The award declared by the learned Arbitrator came to be confirmed by the learned Commercial Court, Jaipur in an application under section 34 of the Arbitration and Conciliation Act. 3. Feeling aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decisions of this Court in the cases of Associate Builders v. Delhi Development Authority, reported in (2015) 3 SCC 49; Steel Authority of India Limited v. Gupta Brother Steel Tubes Limited, reported in (2009) 10 SCC 63 and the recent decision of this Court in the case of Ssangyong Engineering Construction Co. Limited v. National Highways Authority of India (NHAI), rendered on 08.05.2019 in Civil Appeal No. 4779 of 2019, reported in 2019 SCC Online SC 677. 5.3.1 It is further submitted by the learned Senior Advocate appearing on behalf of the appellant that admittedly there was a delay of 21 months in supply of coal, which was due to the force majeure as there was a delay in obtaining the forest clearance and environmental clearance. It is submitted that the price which was agreed by the appellant in the year 2008 to be paid in the year 2011 would never remain the same in the year 201314. It is submitted that therefore though the commencement date as per CMDA was extended due to an admitted fact of force majeure to 25.3.2013, the commencement date would remain as the date defined under the CMDA, i.e., 25.06.2011 and therefore the price escalation ought to be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure that there is no hazard to the plant. It is submitted that despite this, the respondent failed to take delivery. 5.4.2 It is further submitted by the learned Senior Advocate appearing on behalf of the appellant that the High Court has committed an error by not granting the said claim on the ground that the loss was incurred by AMPL (subcontractor) under Coal Mining Services Agreement to which the respondent was not a party and secondly that loss of ₹ 78 crores is not substantiated beyond the Chartered Accountant s certificate. It is further submitted by the learned Senior Advocate appearing on behalf of the appellant that CMDA does not prohibit appointment of AMPL as a subcontractor and in fact any such appointment was approved by the appellant and therefore AMPL cannot be said to be a complete third party to the CMDA. It is submitted that therefore when the respondent failed to lift the fixed quantity of the coal and there was a delay in taking the delivery of the coal for the F.Y. 2013-14, the appellant shall be entitled to the loss suffered to the extent of ₹ 78 crores. It is submitted therefore the High Court has committed a grave error in disallowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that however the interpretation that has been upheld by the learned arbitrator, apart from being devoid of any reasoning in its support, is wholly incompatible with the terms of the CMDA and the conduct of the parties. It is submitted that any award, by standing in complete contravention of clear and express provisions of the CMDA, is in conflict with the public policy of India and therefore is liable to be set aside. It is submitted therefore the High Court has rightly set aside the award in exercise of powers under Section 37 of the Arbitration Act. In support of his above submissions, Shri Tushar Mehta, learned Solicitor General of India has heavily relied upon the decision of this Court in the case of ONGC v. Saw Pipes Limited, reported in (2003) 5 SCC 705; Hindustan Zinc Limited v. Friends Coal Carbonisation, reported in (2006) 4 SCC 445 and Associate Builders v. DDA, reported in (2015) 3 SCC 49. 6.2 Now so far as claim no.1, namely, price escalation is concerned, it is vehemently submitted by Shri Tushar Mehta, learned Solicitor General that the term commencement date has been defined in the agreement to have the same meaning as given to it in clause 4.5.1. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the coal and/or lifting the loss quantity of the coal than they agreed. The same is rightly set aside by the High Court. 6.4 It is further submitted by the learned Solicitor General appearing on behalf of the respondent that similarly the High Court has rightly set aside the claim with respect to escrow account . It is submitted that as such the escrow account was required to be opened as per the circular issued by the Ministry of Coal. It is submitted that, in fact, the appellant consented to open the escrow account which as such was required to be opened as per the guidelines issued by the Ministry of Coal. It is submitted that therefore in fact the appellant consented that the money is being recovered from its running bills to be deposited in the escrow account. It is submitted that even the same is in consonance with clause 3.2.1 of the CMDA. It is submitted therefore the High Court has rightly disallowed the said claim made in escrow account. 6.5 Making the above submissions and relying upon the above decisions, it is prayed to dismiss the present appeal. 7. We have heard the learned counsel for the respective parties at length. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is further observed by this Court in the aforesaid decision in paragraph 33 that when a court is applying the public policy test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. It is further observed that thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. 9.2 Similar is the view taken by this Court in the cases of National Highways Authority of India v. ITD Cementation India Limited, reported in (2015) 14 SCC 21(para 25) and Steel Authority of India Limited v. Gupta Brother Steel Tubes Limited, reported in (2009) 10 SCC 63 (para 29). 10. Applying the law laid down by this Court, we have to examine whether the Division Bench of the High Court has exceeded in its jurisdiction in setting aside the arbitral award impugned before it. 11. For convenience, we shall deal with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011-12 and therefore the appellant shall be entitled to the enhanced amount as is applicable in the year 2013-14 (the price escalation). Having considered the reasoning given by the learned arbitrator, we are of the opinion that the interpretation by the learned arbitrator was both possible as well as plausible. Therefore, merely because some other view could have been taken, the High Court is not justified in interfering with the interpretation made by the arbitrator which as observed was possible and plausible. Therefore, in the facts and circumstances of the case, we are of the opinion that the High Court has clearly exceeded in its jurisdiction in interfering with the award passed by the learned arbitrator with respect to claim no.1 price adjustment/escalation. At this stage, it is required to be noted that though the High Court has observed that the award passed by the learned arbitrator with respect to claim no.1 was against the public policy, with respect, we do not see any element of public policy. It was pure and simple case of interpretation of the relevant clauses of the agreement which does not involve any public policy. Therefore, we are of the opinion that the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant company fulfils the contract as per the agreement and till the closure of the coal blocks. Therefore, the High Court has rightly interfered with the award passed by the learned arbitrator with respect to claim no.3 escrow account by observing that the reasoning is perverse or so irrational that no reasonable person could have arrived at on the material/evidence on record. We are in complete agreement with the view taken by the learned Division Bench of the High Court. 12. In view of the above and for the reasons stated above, the present appeal succeeds in part. The impugned judgment and order passed by the High Court insofar as quashing and setting aside the award passed by the learned sole arbitrator, confirmed by the learned Commercial Court, insofar as claim no. 1 price adjustment/escalation is hereby quashed and set aside and the award passed by the learned arbitrator with respect to claim no.1 is hereby restored. The impugned judgment and order passed by the High Court insofar as quashing and setting aside the award passed by the learned arbitrator with respect to rest of the claims, namely, claim no.2 fixed costs and claim no.3 escrow ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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