R.L.ANAND, J. - (1.) THIS is a revision petition filed by the Steel Authority of India Limited (here-in-after called the Authority) against Messrs Gupta Brothers Steel Tubes Limited (here-in-after called the respondent) and it has been directed against the judgment dated 1.9.1999 passed by the Court of learned District Judge, Chandigarh, who dismissed the appeal of the Authority by affirming the order dated 9.5.1994 passed by the Court of Sub Judge 1st Class, Chandigarh, who dismissed the objections of the Authority under Sections 30/33 of the Indian Arbitration Act, 1940 and made the award dated 7.9.1993 given by the sole Arbitrator Shri K.P. Bhamik as rule of the Court.
(2.) THE brief facts of the case are that on 18.4.1988, the Authority formulated a scheme called "Full Requirement Supply Scheme". This scheme was tailored for meeting the full requirement of the customers for HR Coils/Skolps. The customers who wanted to avail the said material have been required to register their requirement(s) with the Authority. Those who wanted material over and above what was likely to be available from indigenous sources and were willing to accept imported H.R. Coils, were required to register their requirement separately. The scheme was in operation in respect of two separate quarters, i.e. July to September, 1988 and October to December, 1988. In pursuance of the terms of the application, respondent submitted application for 1500 metric tonnes of imported material for the period July to September 1988 and also furnished the financial cover in terms of the said scheme. However, as early as on 15.9.1988 the Authority regretted its inability to arrange for the import against the indent for reasons beyond its control. Thereafter, the respondent indented for the supply of 1500 metric tonnes of imported material for the quarter October to December 1988. The indent was accepted by the Authority. The respondent furnished securities in the shape of bank guarantee in lieu of the contractually required irrevocable letter of credit. The respondent-firm also took physical delivery of the goods on 7.3.1989 and made payment for the same on 15.2.1989. The Bank guarantee was returned but the customs duty, port charges etc. were reimbursed to the respondent. It appears that some dispute/differences arose between the parties. Thereafter, on 3.11.1989 the respondent submitted a claim petition to the appointing authority who appointed the sole Arbitrator by the name of Shri K. Janardhana. For some reasons, Shri K. Janardhana resigned in the month of October 1990 and in his place Mr. K.P. Bhamik was appointed as Arbitrator. After many sittings, the Arbitrator gave an award on 7.9.1993 and filed the same in the Court on 18.9.1993. The Arbitrator, under different heads, awarded the amount. Notice of filing of the award was served upon the Authority. The Authority filed objections and inter alia, pleaded that the award was liable to be set aside on the ground that after the conclusion of the arbitration proceedings on 7.9.1993, the Arbitrator had not indicated the venue at which Court the award would be filed. According to the Authority, the Calcutta High Court was the closest to the Arbitrator's place, so it was expected that the award would be filed there. But to the utter surprise of the appellant/objector, it received a notice from the civil Court at Chandigarh informing that the award had already been filed; that the arbitrator agreed to accept the costs and journey to and fro from Durgapur to Chandigarh and had spent 3 to 4 days at Chandigarh enjoying the hospitality of the respondent behind the back of the objector. So his conduct had led it to believe that the arbitrator must at all material times have been partial and favourably disposed towards the respondent. It was also pleaded that even if the arbitrator had wanted to file an award at Chandigarh, he should have filed it through post for being filed in the civil Court at Chandigarh. It was also pleaded that the Arbitrator showed his bias towards the respondent by holding in para 9(A).5 of the award that the Authority, for obscure reasons, by conduct caused delay in the proceedings on one pretext or the other. These observations were un-founded and that on the other hand, the delay has been caused by the respondent-firm. It was also asserted that Arbitrator had exceeded the scope of reference by considering the claim relating to the contract for the period July to September 1988, although it was only the contract for the period October to December 1988 which had been referred to the Arbitrator. The petitioner also pleaded that the Arbitrator entertained claims where there was no pre-existing dispute. The question of entertaining any claim for the period July to September 1988 did not arise because there was no pre-existing dispute between the parties which could form the subject-matter of the arbitration. There was no assertion or denial of the claim which was a pre-condition for arbitration of the dispute. It was stated that in respect of the period October to December 1988, except the claim for refund of interest to the tune of Rs. 97,032/-, there was no pre-existing dispute which should form the subject- matter of reference. The respondent had not raised even a whisper of the claim in respect of Claims A, AA, AAA, B, C and D prior to the arbitration. So, it was asserted by the Authority that the Arbitrator had committed serious jurisdictional error in entertaining the claim and awarding huge amount to the respondent. It was also asserted by the petitioner that the arbitrator had entertained claim in respect of the dispute not existing at the time of the reference; that under claim AA the respondent claimed loss of profit in respect of the period 1989-90, 1990-91 and 1991-92 etc. The arbitrator had awarded an amount of Rs. 51,13,800/- by way of loss of profit for the years 1988-89, 1989-90, 1991-92 and 1992-93, although the agreement did not provide for dispute arising subsequent to the date of reference. Next, the petitioner stated that the arbitrator went into the constitutional question of discrimination and violation of Article 14 of the Constitution of India although under the Arbitration law, he was only permitted to look at the terms of the contract for arriving at a correct decision. The case of the petitioner before the trial Court was that the Arbitrator had mis-conducted himself and committed jurisdictional error by ignoring the express terms of the contract. Under Clause 7.2 of the agreement, the applicable compensation was restricted to 3 per cent of the value of the material not supplied, which formulated upper limit of the compensation payable, but the arbitrator ignored the said provision and proceeded to award huge sum exceeding Rs. 42,00,000/- whereas under Clause 7.2 the compensation would come to nearly Rs. 3.66 lacks. In any case, for the period from October to December 1988, the delay in delivery was to the extent or maximum three days and under clause 7.2 applicable compensation would have been the extent of Rs. 30,000/- but the arbitrator had awarded a fantastic sum of Rs. 44 lacs under various heads such as liquidated damage, price difference and penalty etc. The objector also raised other issues relating to the mis-conduct and it was pleaded that by ignoring the contractually stipulated limits of compensation, the arbitrator had not only acted contrary to the contractual clause but had also violated the provisions of Section 73 of the Contract Act by awarding remote and impermissible damages on the basis of notional loss of profit and that the arbitrator had failed to call for the material documents. The amount awarded by him was unconscionably high and the award was perverse and was based on no evidence.
(3.) THE respondent filed the reply to the objections and denied all the material allegations pleaded by the petitioner, and raised the plea of limitation and stated that the objection petition under Sections 30/33 of the Indian Arbitration Act was not properly verified; that the objections were not maintainable in the present form; that the objections were vague, misconceived and tainted with mala fides. It was asserted that the application filed by the Arbitrator was well reasoned. He evaluated the evidence and the conclusion arrived by him would not be gone into or substituted by the evaluation of the Court. It was controverted that fresh claim in respect of the fist contract relating to the period July to September 1988 were brought in for the first time through the application dated 12.9.1991. It was averred that the application dated 12.9.1991 was necessitated on account of computation or calculation errors, non-availability of certain documents and that the application was decided by the Arbitrator after hearing both the parties. It was pleaded that only the Chandigarh Courts had jurisdiction because the dealings between the parties were held at Chandigarh, booking of the goods were made at Chandigarh; the financial arrangements were made at Chandigarh; the goods were to be supplied at Chandigarh; the bank guarantees were payable at Chandigarh and, therefore, there was no question of award being filed at Calcutta. It was also pleaded that under the provisions of Section 14 of the Arbitration Act, 1940 either party can make a request to the arbitrator to file an award having jurisdiction and that if the respondent had made prayer to the Arbitrator to file an award at Chandigarh Court which had jurisdiction, and had also undertaken to pay all the expenses of the arbitrator, no illegality had been committed nor any misconduct on the part of the arbitrator could be spelt out. It was also averred that under the law, the arbitrator was not obliged to inform the petitioner about the venue where he intended to file an award. Besides this, the filing of the award in the Court was an act and conduct of the arbitrator after the passing of the award and so, on the basis of such act, it cannot be concluded that the arbitrator was biased or mis-conducted himself during the arbitration proceedings. It was stated that no illegality or partiality was disclosed by the arbitrator in accepting the costs of journey and other expenses from the respondent. It was pleaded that no bias or lack of objectivity could be spelt out. The observations of the Arbitrator given in paragraph 9-A.5 of the award and the record conclusively established that it was the petitioner who delayed the proceedings deliberately. The respondent further denied that the claim petition dated 3.11.1989 related to the quarter October to December 1988 only and only that part of the dispute was referred to the arbitrator. It was pleaded that the claim petition referred to the claim in respect of the dispute for both these quarters and that vide application dated 12.9.1991, respondent had merely quantified the claim and no fresh claim had been added. It was denied that there was no pre-existing dispute between the parties with regard to July to September 1988 quarter.;