Case Note & Summary
The petitioner, Shiv Ganga Transport Private Limited, entered into a contract with the respondent, the President of India through the Commandant, Embarkation Headquarters, on 20.02.2004 for the transport of defence stores. On 19.05.2004, the respondent requisitioned seven trailers of specific specifications. The petitioner, by letter dated 20.05.2004, informed the respondent that the requisitioned trailer was not fit for the consignment and that transportation would be at the respondent's risk and cost. Despite this, the respondent insisted on using the trailer. On 21.05.2004, the trailer met with an accident, damaging the consignment. The respondent demanded Rs.13,53,763/- on 08.10.2004. The dispute was referred to arbitration. The Arbitrator, by award dated 19.05.2008, held that the accident was not an act of God or enemy action, and that the contractor was bound to deliver the consignment safely under para 19(a) of the contract. The Arbitrator directed the petitioner to pay the entire loss of Rs.13,53,763/- with 8% interest from 12.08.2006 and costs of Rs.25,000/-. The petitioner challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that the Arbitrator failed to consider the letter dated 20.05.2004 and the respondent's insistence. The court noted that the petitioner did not produce the letter before the Arbitrator, and the Arbitrator's finding that the contractor had taken adequate precautions was based on evidence. The court held that the Arbitrator's interpretation of the contract clause was plausible and not perverse. The court also noted that the petitioner had not proved that the accident was an act of God or enemy action. The court dismissed the petition, upholding the award.
Headnote
A) Arbitration - Section 34 Petition - Interference with Arbitral Award - The court considered whether the Arbitrator's finding that the contractor was liable for the loss despite the contractor's warning about the unsuitability of the trailer was perverse or against public policy. Held that the Arbitrator's interpretation of the contract clause (para 19(a)) making the contractor liable for safe delivery was a plausible view and not open to interference under Section 34 (Paras 1-10).
B) Contract - Interpretation - Liability for Loss - The contract clause (para 19(a)) required the contractor to deliver the consignment safely to the consignee. The Arbitrator held that even if the contractor took adequate precautions, the contractor was bound to bear the loss. The court upheld this as a possible interpretation, noting that the contractor had not proved that the accident was an act of God or enemy action (Paras 3-10).
C) Evidence - Burden of Proof - The petitioner failed to produce the letter dated 20.05.2004 before the Arbitrator. The court noted that the Arbitrator's finding that the contractor had taken adequate precautions was based on evidence, and the petitioner's failure to prove the respondent's insistence on using the trailer meant the award was not perverse (Paras 3-10).
Issue of Consideration
Whether the Arbitral Award dated 19th May, 2008 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground that the Arbitrator failed to consider the petitioner's letter dated 20.05.2004 and the respondent's insistence on using the requisitioned trailer.
Final Decision
The court dismissed the Arbitration Petition No. 126 of 2009, upholding the Arbitral Award dated 19th May, 2008.
Law Points
- Section 34 of the Arbitration and Conciliation Act
- 1996
- Public Policy
- Interpretation of Contract
- Act of God
- Burden of Proof
- Interference with Arbitral Award
Case Details
2010 LawText (BOM) (03) 50
Arbitration Petition No. 126 of 2009
Mr. Mannadiar i/by M/s. Mannadiar & Co. for the Petitioner, Mr. S. J. Shah for the Respondent
Shiv Ganga Transport Private Limited
The President of India through the Commandant, Embarkation Headquarters
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Nature of Litigation
Petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award.
Remedy Sought
Setting aside of the Arbitral Award dated 19th May, 2008.
Filing Reason
The petitioner contended that the Arbitrator failed to consider the letter dated 20.05.2004 and the respondent's insistence on using the requisitioned trailer, and that the award was against public policy.
Previous Decisions
The Arbitrator passed an award on 19th May, 2008 directing the petitioner to pay Rs.13,53,763/- with 8% interest from 12.08.2006 and costs of Rs.25,000/-.
Issues
Whether the Arbitral Award is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground that the Arbitrator failed to consider the petitioner's letter dated 20.05.2004 and the respondent's insistence on using the requisitioned trailer.
Submissions/Arguments
The petitioner argued that the Arbitrator failed to consider the letter dated 20.05.2004 wherein the petitioner warned that the trailer was not fit and that transportation would be at the respondent's risk and cost.
The petitioner argued that the respondent insisted on using the trailer despite the warning, and therefore the loss should be borne by the respondent.
The respondent argued that the Arbitrator's finding was based on evidence and that the petitioner did not produce the letter before the Arbitrator.
The respondent argued that the contract clause (para 19(a)) made the contractor liable for safe delivery, and the award was not perverse.
Ratio Decidendi
The court held that under Section 34 of the Arbitration and Conciliation Act, 1996, the court cannot interfere with an arbitral award merely because a different view is possible. The Arbitrator's interpretation of the contract clause (para 19(a)) making the contractor liable for safe delivery was a plausible view. The petitioner failed to prove that the accident was an act of God or enemy action, and the letter dated 20.05.2004 was not produced before the Arbitrator. Therefore, the award was not perverse or against public policy.
Judgment Excerpts
The petitioner has invoked Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Act) and thereby challenged the Award dated 19th May, 2008 whereby the Arbitrator has directed the petitioner to pay the entire loss of Rs.13,53,763/ with 8% interest with effect from 12.08.2006 till payment and also cost of Rs.25,000/.
After a passionate consideration of all issues mentioned above I have arrived at the conclusion that the said accident cannot be termed as an act of God or due to actions of the enemy of the Government of India and even though the contractor had taken adequate precautions with respect to the type of vehicle provided, loading and lashing of the equipment and speed of the vehicle during transit, but since the contractor was bound to deliver the consignment entrusted to him safely to the consignee vide para 19(a) of the Contract Deed, it is my considered view that entire loss of 13,53,763/ be borne by the contractor.
Procedural History
The petitioner entered into a contract with the respondent on 20.02.2004. On 21.05.2004, an accident occurred damaging the consignment. The respondent demanded Rs.13,53,763/- on 08.10.2004. The dispute was referred to arbitration. The Arbitrator passed an award on 19.05.2008. The petitioner filed Arbitration Petition No. 126 of 2009 under Section 34 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court, which was dismissed on 10.03.2010.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 34
