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Airport Authority of India v/s Protective Consultancy & Security Services (P) Limited & Another

    IA 7972 of 1998 & CS(OS) 2107A of 1997
    Decided On, 08 November 2005
    At, High Court of Delhi
    For the Petitioner: Ms. Maldeep Sidhu, Ms. Bindu Verma, Advocates. For the Respondents: Kailash Vasdev, Senior Advocate with Sanjay K. Shandilya, Prateek Kumar, Advocates.

Judgment Text
Sanjay Kishan Kaul, J.

IA 7972/1998 ( U/Sections 30 and 33 of the Arbitration Act, 1940)

1. The objections have been filed by the petitioner to the award of Sole Arbitrator Sh. Rajendra Pal, dated 21.8.1997. The parties have entered into an agreement dated 1.10.1990 whereby the respondent was required to provide security services at the Cargo Terminal, IGI Airport managed by the petitioner. It maybe noticed that the Arbitrator was Additional Chief Engineer (C) at the time when he was appointed as the Arbitrator and is a technical person.

2. A perusal of the award shows that there are three claims which were adjudicated by the Arbitrator.

3. The first claim is towards the management charges claimed by the respondent. This claim was rejected and thus there are naturally objections to the same.

4. Claim No. 2 is towards the unilateral and unjustified penal deductions. The relevant clause in this behalf is clause No. 27 which is as under:

'The Agency shall be penalized for theft, pilferage, wrong delivery/acceptance of cargo as per the authenticated documents on proven negligence of the security personnel of the Agency or on occasioned loss. In the event of such loss, a Joint Investigation by the Authority, DGR Representatives and the Agency will be carried out to identify the cause and apportion blame. Such investigation will be carried out within 24 hours. In case the representative of DGR does not turn up, the investigation will be carried out by Authority and the Agency’s designated official(s). The inquiry shall further indicate the percentage of lapses in respect of each of the other agencies concerned. Where a mala fide or negligence of the Agency is irrefutably established by the Joint Inquiry, a penal deduction up to a maximum of Rs. 35,000/- (Rupees thirty-five thousand only) per major incident may be levied after formal approval of the Member (Operation). However, instances wherein pilferage theft have occurred through mala fide actions of the Agency personnel. Same shall attract imposition of the penal charges of Rs. 2,500/- per instance. Member(Operation) shall adjudge each case on its merit based on the joint investigations, keeping in view the circumstances and the extent to which the security Agency vis-a-vis the other Agency’s personnel are responsible and thereafter specify the amount of deductions, if any, in each of the case to be deducted from the succeeding monthly bill. Four major incidents will render the contract liable for termination. Cumulative charges as also in this regard due to damages arising out of the negligence may be restricted to Rs. 1.5 lakh per annum. While deciding the extent of liability due weightage will be given in cases where pilferage/theft has occurred when the sensitive cargo was not placed in the assigned location in the ‘L’ cage, or strong room without intimating to the Security Agency. The Authority shall not take recourse to any penal deductions whatsoever in an arbitrary and unilateral manner. In the event of such loss, the Authority shall report the matter to the police for proper investigations but the factum of investigations by the police will not absolve the Agency of the aforesaid liability.'(Emphasis supplied)

5. The objection of the petitioner is that the amount awarded under the said claim has been so erroneously awarded on account of the failure of the Arbitrator to appreciate the evidence placed before the Arbitrator.

6. If that be the position, it does not even fall within the purview of the scrutiny under Sections 30 and 33 of the Arbitration Act, 1940. It is not the function of this Court to re-appreciate the evidence or to interfere with an award merely on the basis that the Court would come to a different conclusion on the material available before the Arbitrator. It is only in the eventuality of the award being totally perverse that such an interference is called for. In this behalf a judgment of the Division Bench in DDA v. Bhagat Construction Co. (P) Ltd. and Anr., 2004 (3) Arb.LR 481 This judgment, and even otherwise, strength may be drawn from the observations of the apex Court in Food Corporation of India v. Joginderpal Mohinderpal and Anr., (1989) 2 SCC 347 and Gujarat Water Supply and Sewerage Board v. Unique Erectors (Gujarat) (P) Ltd. and Anr., AIR 1989 SC 973. It is also to be noticed that the person appointed is a technically qualified person and the object is to see that a person conversant with the trade goes into the matter. Thus due weightage must be given to the award of such an Arbitrator.

7. Even if the merits of this objection were to be considered, a perusal of the award shows that there is cogent reasoning given for the same by the Arbitrator. The monthly penalties had already been made for the loss/pilferage of goods and it is only at the time of final settlement in July, 93 that the maximum penalty was imposed. The respondent did not even seriously contend to the contrary before the Arbitrator as is apparent from the observations in the award which are under:

'The respondent, inter alia, stated that the recoveries/deductions made were in order and the claimant were given a chance to research the lost cargo. They supported their statement by copies of letters written to the claimant.

The respondent stated that for goods received early or late, date of information of missing/pilferage/theft has been taken as date of incident.

The claimant maintained that for lost/pilfered goods monthly penalties were already made. Again, at the time of final settlement in July 93, maximum penalty was imposed (Rs 3.00 lac) and balance amount was recovered.

They also alleged that no handing over of the items in Cargo Complex was done by the respondent and as such, untraceability of a parcel after 24-30 months of its receipt can not be termed as laxity on their part. It was also stated that the claimant were penalized for weight variance in intact parcels and submitted relevant documents to show such happenings.

The respondent informed that there were 235 files for penal deductions and the claimant were advised to inspect the same. The claimant, after inspection of files submitted that at no time an inquiry was held as is contemplated as per agreement and all decisions taken thereon were unilateral, without giving any opportunity to claimant to explain their position in the matter. Even DGR representative was not informed as per agreement nor the cause of loss was ever identified.

The respondent did not refute the allegations made by the claimant.'

(Emphasis supplied)

8. It is thus apparent that the deductions sought to be made as penalties at the fag end after three and a half years were clearly an afterthought and were further not in conformity with the stipulations as specified in Clause 27 of the agreement.

9. As far as claim No. 3 is concerned, the same relates towards dues as incentives. This claim is in two parts and the first part of the claim has been rejected, and thus, is not required to be gone into.

10. The second part of the claim relates to one of the two packets which was found as open and there was difference between declared weight and the actual weight. The rival contentions have been considered on the basis of the material on record and its a pure finding of fact based on the same.

11. Learned Counsel for the petitioner in this behalf has referred to Clause 28, which is as under:

'If no instance of pilferage/theft occurs during any calender month, the Agency shall be given the reward of not less than 5% (five per cent) only of the bill for that given month payable every six months. Claims received by the Authority causes of which are not attributable to the Agency shall not be taken into consideration for the purpose of this award. for any exemplary services rendered by the security personnel in intercepting of culprit or preventing unauthorized removal of cargo, the Authority may grant cash award to the concerned personnel may be determined by the General Manager (Cargo).'

12. The consignee in that particular case had declared that he would not claim any damages for the alleged differential of weight. It was in view of that circumstance that the Arbitrator came to the conclusion that the respondent cannot be penalized on that account.

13. In view of th

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e aforesaid, I find no merit in the objections and the application is dismissed. CS (OS) 2107A/1997 Objections having been dismissed and there being no other legal impediment to the award, the award of the Sole Arbitrator Mr. Rajendra Pal, dated 21.8.1997 is made rule of the Court. In terms of the award no interest has been granted. It is thus directed that, taking into consideration the prevailing rates of interest at the relevant stage of time, the respondent is entitled to simple interest at the rate of 12 per cent per annum from the date of award till date of decree and further interest till date of realization at 9 per cent per annum. In case the amounts in terms of the decree is paid within 60 days from the date of decree, the petitioner shall be entitled to exemption from future interest. Parties are left to bear their own costs. Decree sheet be drawn up accordingly.