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Swan Gold Mining Limited v/s Hindustan Copper Ltd.

    A.P. No. 583 OF 2009

    Decided On, 17 February 2012

    At, High Court of Judicature at Calcutta


    For the Petitioner: Surojit Nath Mitra, Sr. Adv., Amitava Ghosh, Abhijit Sarker, Advocates. For the Respondent: Ranjan Bachwat, Surya Sadhan Basu, Advocates.

Judgment Text


This is an application filed under Section 34 of the 1996 Act to set aside the Award dated 24th July, 2009.

The case of the petitioner is that a notice inviting tender (NIT) was issued by Hindustan Copper Ltd. (HCL) inviting offers for operation of its Surda Mine and Mosabani Concentrator Plant. The Price Bid was exclusive of all taxes as per the terms of the NIT and on basis thereof the offer was submitted. Such offer was subsequently modified and in such modified offer too taxes were excluded. The letter of intent was issued on 3rd March, 2007 and the contract was signed on 26th March, 2007. As disputes arose between the parties with regard to payment of taxes the arbitration clause was invoked and dispute referred to arbitration. The Arbitrator has based his Award on a case not pleaded, has decided on an issue not before him and the case not put to the witness. Reliance is placed on 2003 4 SCC 161 for the proposition that case which was not pleaded cannot be dealt with nor relied on. In 2003 10 SCC 653 and AIR 1961 Calcutta 359 it has been held that the case not suggested to the witness cannot be relied on. Regarding the proceedings before the Tender Evaluation Committee the case was not suggested by the Arbitral Tribunal which has proceeded solely on the basis of the proceedings before the Tender Evaluation Committee. Therefore, the Arbitral Tribunal has acted contrary to the laws of the land and for the said reasons the Award be set-aside.

Opposing the said application counsel for the respondent submits that the only issue that was before the Arbitral Tribunal was with regard to the price bid and in particular exclusion of taxes. Wing Commander Ahlawat was not called as a witness therefore no opportunity was given to cross-examine him. The argument made now was not argued before the Arbitrator. As exclusion of tax was in issue Mr. Ahlawat should have been called by the claimant as he made some writings in his handwriting at the time of consideration of the price bid. On 7th March, 2009 documents was disclosed by the respondent. An affidavit of evidence was also filed by Mr. Rothery on 19th March, 2009 and by virtue of paragraph-5 the inclusion or exclusion of taxes was brought in issue by the claimant’s witness. Therefore, the only issue raised was with regard to inclusion or exclusion of taxes and by not calling Mr. Ahlawat the claimant took a risk. In the Techno Commercial Bid deviation was permitted but the price bid was as per the format enclosed with the NIT. An authorized person was to be present to take spot decisions and Mr. Ahlawat was the petitioner’s representative. In the price bid tax was added separately but subsequently Mr. Ahlawat gave it up in his hand writing and confined the price bid to the base price plus 55 per cent. Mr. Rothery is the only witness of the claimant. The Minutes of the 14th meeting of the Tender Evaluation Committee on 8th June, 2009 although not enclosed with the counter statement was disclosed subsequently as the Arbitrator called for it. Mr. Rothery has denied the authority of Mr. Ahlawat in his affidavit of evidence but he was not before the Tender Evaluation Committee. This will be evident from the answers of Mr. Rothery in cross-examination to Questions 12 and 13. It is not the case of the petitioner that Mr. Ahlawat did not sign and for the same, the answers to questions 20 and 21 should be looked into. In case of deviation Form-F was to be filed but no such form was filed, as there was no deviation from Clause 4.9.1 which will be evident from the answers to questions 38, 56 and 59. The contract is dated 26th March, 2007 and has been signed by Mr. Ahlawat and subsequent thereto the work order was issued on 14th April, 2007. By not calling any witness besides Mr. Rothery the petitioner took a risk. In case Mr. Ahlawat was called he too like Mr. Rothery could have said that he lacked authority.

In view of Section 19 of the 1996 Act, the Evidence Act and Code of Civil Procedure are not to apply. The case which is sought to be made out now was not before the Arbitrator. 2003 4 SCC 161, AIR 1961 Calcutta 359 and 2003 10 SCC 653 are distinguishable. Reappraisal of evidence is not permitted as held in 2005 6 SCC 462. The Arbitrator is the best Judge of evidence as held in 2007 2 Arb LR 508 and 2003 5 SCC 705. It has not been pleaded that pursuant to negotiation between the parties the price bid was modified. Therefore, the application warrants no order and is liable to be dismissed.

In reply counsel for the petitioner submits that the inclusion or exclusion of excise duty was the only issue before the Arbitrator and whether Mr. Ahlawat had agreed or not. There was no deviation from the NIT while making the offer. If there was a deviation the same would have been rejected. The second offer if at all was revised. The agreement by Mr. Ahlawat does not feature before the Committee. The Arbitrator has not decided the issue, therefore, the Award is bad. Section 19 of the 1996 Act contemplates that principles of natural justice be followed and 2005 6 SCC 462 makes it amply clear that where the Arbitrator has decided on a point which the claimant was not allowed to deal with, renders the Award bad. The Arbitrator has decided an issue which was neither pleaded nor before him nor was the case put to the witness. Therefore, the Award dated 24th July 2009 be set–aside.

Having considered the submissions of the parties the petitioner seeks to set-aside the Award dated 24th July, 2009 under Section 34 of the 1996 Act. Section 34 (2) of the 1996 Act permits setting aside of an Award for the reasons set-out in Section 34(2)(a)(i) to (v), Section 28(1)(a) and Section 34(2)(b)(ii). Contrary to public policy will include –

(a) fundamental policy of Indian law; or

(b) the interest of India; or

(c) justice or morality; or

(d) if it is patently illegal.

The petitioner if at all can seek for setting-aside the Award on the ground that the Award is opposed to public policy viz. the fundamental policy of Indian law.

The law in the instant case would be of Evidence as according to the petitioner, the Arbitrator while passing his Award has relied on a case not pleaded, therefore, could not have made it the basis of his Award. Similarly with regard to the proceedings before the Tender Evaluation Committee this was also not suggested to the witness.

The Arbitrator has passed his Award on not only the deposition of the witnesses but has examined the documents annexed to the pleading and has also considered its relevancy.

The Arbitrator has found that Mr. Rothery the only witness of the claimant had signed the work order whose terms was in consonance with the Clauses in the NIT and based his Award thereon.

No document was found on record by the Arbitrator disputing the authorization of Mr. Ahlawat. It is only in cross-examination that Mr. Rothery stated that Mr. Ahlawat was not authorized but this again according to the Arbitrator is belied by the Price Bid signed by Mr. Michael Kiernan, Managing Director of the petitioner who mentioned the name of its representative as Wing Commander Y. Ahlawat.

Mr. Rothery had signed the work order and therefore had accepted all terms therein on behalf of the petitioner. The cases relied on by the petitioner is also not applicable to the facts of this case. Moreso, as 2003 4 SCC 161 was a case of second appeal and distin

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guishable on facts. In view of Section 19 of the 1996 Act, the Evidence Act has no application. The deposition of Mr. Sengupta is one of the reasons for passing the Award and to dislodge his evidence all that was required to be done by the petitioner was to produce Mr. Ahlawat as a witness as rightly observed by the Arbitrator. 2003 10 SCC 653 is also not applicable as the Arbitrator has not proceeded solely on the evidence of the member of the Tender Evaluation Committee but has on the basis of documents produced proceeded to give the Award. In view of 2005 6 SCC 462 which does not permit re-appraisal of evidence so also 2007 2 Arb LR 508 A (1961) Cal. 359 is not applicable to the instant case. For all the aforementioned reasons, therefore this application warrants no order and is dismissed.