SANJIB BANERJEE,J. - (1.) The Court : Both sides are in appeal from an order of December 12, 2018 passed on a challenge by the Steel Authority of India Ltd. (SAIL) to an arbitral award of September 30, 2008. The challenge was under Section 34 of the Arbitration and Conciliation Act, 1996.
(2.) The facts have been appropriately recorded in the detailed judgment and order impugned herein. SAIL manufactures steel and steel products and has a plant at Bokaro. In 2004, SAIL invited tenders for purchase of sponge iron on conversion of iron ore for manufacturing steel at its Bokaro plant. The claimant in the arbitration proceedings, a manufacturer of sponge iron, submitted its tender and price bid. Certain correspondence were exchanged between the parties and it appears that a memorandum of understanding was entered into between the parties on February 12, 2005 wherein the SAIL described as "the purchaser" and the claimant before the arbitral reference as "the seller". Such memorandum of understanding was valid for a period of a year from March 1, 2005 and it contemplated that SAIL would place purchase orders on the claimant for conversion of iron ore to be supplied by SAIL to sponge iron as per the agreed specifications. There was a security deposit which was to be furnished. By a communication of April 7, 2005, the claimant requested SAIL to place purchase orders, but SAIL did not immediately respond to such letter. By a letter dated May 9, 2005, SAIL requested the claimant to supply its income tax PAN number so that the earnest money deposited could be refunded. Such letter implied that the agreement was not to be acted upon any further. Disputes and differences arose between the parties and an arbitral reference commenced. SAIL questioned the very basis of the reference by applying under Section 16 of the Act of 1996. By an order dated April 10, 2006, the arbitrator rejected the objection. SAIL then filed a counter-statement and the entire matter was considered on merits by the arbitrator while rendering his award of September 30, 2008.
(3.) The claimant sought damages. The arbitrator first went about assessing whether there was a concluded contract between the parties for the claimant to allege breach of such concluded contract and claim damages as a consequence. The arbitrator found, after a detailed discussion which has been appreciated even in the impugned judgment, that there was a concluded contract between the parties. The arbitrator then found that there was a breach and the claimant was liable to be compensated by SAIL. As to the assessment of the quantum, the arbitrator placed reliance on the evidence of a chartered accountant as to the loss of profit occasioned to the claimant pursuant to the issuance of the letter dated May 9, 2005. The arbitrator also held that since the agreement could be terminated upon three months' notice, the agreement would be deemed to have been terminated on or about August 8, 2005. Thus, the arbitrator awarded damages for the period between March 1, 2005 and August 8, 2005 amounting to a total of Rs.3.87 crore. Before critically addressing the award, the impugned judgment records the accepted parameters for assessing an arbitral award in this jurisdiction. There is a reference to Section 34 of the said Act of 1996 and copious references to the principles that ought to be followed on the receipt of a challenge to an arbitral award. In particular, the Court of first instance notices the principles enunciated in a recent Supreme Court judgment reported at (2015) 3 SCC 49 (Associate Builders). In course of such discussion, the Court of first instance refers to the arbitrator being the master of the quality and the quantity of evidence and that if a possible view was taken by the arbitrator on facts, it was not liable to be interfered with in this jurisdiction of limited authority.;