Gauhati High Court: The appellant company invited tenders for transportation of gas cylinders to which the respondent company replied and was accepted to transport cylinders at the rate of Rs 65 per cylinder, excluding toll and ferry charges, as the respondent indicated on their price bid. Their bid was accepted and against production of appropriate government-issued receipts for toll and ferry charges, the respondent was reimbursed accordingly by the appellant from February 2001 to November 2001 over and above the amount agreed upon (i.e. Rs 65) but their bills for December 2001 to May 2004 were not cleared because another transporter on contract with the appellant had been charging considerably less for the transportation, to which the respondent replied saying that the transporter in question had been ferrying the cylinders on regular ferries with other goods and people while they had been hiring exclusive ferries in compliance with Explosive Rules and Regulation .
The appellant company contended that nowhere does the terms for the tender specify that toll and ferry charges will be paid over and above the charge agreed upon per cylinder, i.e. Rs 65. This was despite the fact that in the tender preceding this, i.e. the one in force till January 2001 and even for a few months of the contract with the respondent, these charges were ordinarily reimbursed over and above the price agreed in the tender documents. Hence the arbitrator allowed the respondent’s claim. This was challenged under Section 34 of the Arbitration and Conciliation At, 1996 (“Act”) but the challenge was dismissed by the District Judge and hence the appellant company approached the High Court under Section 37 of the Act.
The appellant’s grievance was that the arbitrator had not confined himself to the contract between the parties while passing his award. The tender document laid out Rs 65 as the all-inclusive charge of transportation and the contract contained no mention of toll and ferry
charges. The payment made for the first few months was the result of a mistake on part of the appellant and further, only because these charges were reimbursed separately historically is no ground for them to be reimbursed in the current contract as well. The arbitrator, according to the appellant, thus, went beyond the contract agreement and the District Judge also failed to take notice of this. Hence the arbitral award was hit by Section 34 of the Act, relying on Delhi Development Authority v. R.S. Sharma and Company, (2008) 13 SCC 80 and State of Rajasthan v. Nav Bharat Construction Co., (2006) 1 SCC 86.
The respondent-transportation company argued that though the original tender document made no provision for reimbursing toll and ferry charges, the same had been agreed upon during the finalization of the tender process by the appellant which is shown by the written statements filed by the appellant. These charges were also paid to the other transporter currently engaged by the appellant and also to previous such transporters. The arbitrator had taken all this into consideration while passing the award and though he did not stick to the four walls of the contract, his award was based on substantial evidence which was in no manner perverse and hit by Section 34. The respondent relied on the case of Oil and Natural Gas Corporation Ltd. v. Astra Construction (P.) Ltd., 2012 SCC OnLine Gau 515.
The Court held that as the claim for toll and ferry charges was allowed during the finalization of the tender proceedings, the appellant company could not refute the same payment only because the tender document did not provide for it. It also found that Rule D(2)(k) of the tender document which deals with ‘Safety’ mandates that the cylinders should not be transported with other goods and persons except the driver and cleaner of the truck. Also, evidence was produced to show that since no standard rate existed for the transfer of cylinders, the respondent was not wrong in resorting to hiring exclusive ferries.
The Court relied on McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181 to reiterate the supervisory role of the court in the arbitration proceeding, where intervention should happen only in cases of fraud or bias. The appellants raised objections to the authenticity of certain documents produced by the respondent in front of the arbitrator but subsequently failed to ask for court assistance in taking evidence, therefore waiving off that right.
Hence the Court held that the arbitrator passed his award well within the terms of the contract, keeping in view the safety guidelines prescribed for the transportation of gas cylinders and no interference was called for. The appeal was accordingly dismissed. [Indian Oil Corporation Ltd. v. Moni Madhav Dutta, 2018 SCC OnLine Gau 465, decided on 14-05-2018]