Case Reference
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Civil Appeal No.3287 of 2002, decided on May 3, 2002
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Judges :
Shri Justice V.N.Khare and Shri Justice Ashok Bhan
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Parties :
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W.B.State Warehousing Corpn.
and another (Appellant) Vs. Sushil Kumar Kayan and others (Respondents)
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Question of Law :
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Under what circumstances can it be said
that an Arbitrator has exceeded his jurisdiction?
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Gist of the Case:
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| In the year 1985, the Respondent
imported coils of seconds/defective zinc aluminium sheets
from the European Economic Community. The Customs Authorities
assessed the goods for a value higher than that declared by
the Respondent. The goods were kept with the Appellant Corporation
pending disposal of the case. The Respondent filed a writ
petition before the Calcutta High Court challenging the assessment
made by the Customs Authorities. In the meanwhile, some coils
belonging to the Respondent which were kept in the custody
of the Appellant Corporation were stolen for which the Respondent
claimed damages from the Corporation. The Corporation also
claimed some amount from the Respondent towards warehousing
charges. To avoid delay in adjudication, the Calcutta High
Court referred the dispute to an Arbitrator with the consent
of the parties. The following three issues were referred for
the decision of the Arbitrator:
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| (i) |
The claim of West Bengal State
Warehousing Corporation against the Respondent towards
warehousing charges. |
| (ii) |
The claim of the Respondent for damages in
respect of the 18 coils which were stolen while in custody
of the West Bengal State Warehousing Corporation |
| (iii) |
Any incidental question connected with the
aforesaid disputes |
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| The Arbitrator gave his award covering
all the three issues mentioned above. In respect of issue no.2,
the Arbitrator awarded damages of Rs.15 lakhs in favour of the
Respondent herein. Before the Arbitrator, the Appellant Corporation
took the plea that the damages, if any, are to be restricted
to the declared value of the goods in the agreement entered
into between the Corporation and the Respondent through its
Clearing Agent. This plea was rejected. Counsel for the Appellant
Corporation relying upon clauses (f) and (g) of paragraph 44
of the judgement of the Supreme Court in Rajasthan State Mines
and Minerals Ltd. vs. Eastern Engineering Enterprises contended
that if the arbitrator travels beyond his jurisdiction or acts
in excess of his jurisdiction then the award can be set aside
and submitted that since the arbitrator had acted beyond the
terms of the agreement arrived at between the parties, the arbitrator
had acted in excess of jurisdiction and, therefore, the award
was liable to be set aside.
The Supreme Court observed that clauses (e), (f) and (g)
of paragraph 44 of the aforesaid judgement have to be read
together. In order to determine whether the Arbitrator has
acted in excess of his jurisdiction what has to be seen is
whether the Claimant can raise a particular claim before the
Arbitrator. If there is a specific term in the contract or
the law which does not permit the parties to raise a point
before the Arbitrator and if there is a specific bar in the
contract to the raising of the point, then the award passed
by the Arbitrator in respect thereof would be in excess of
his jurisdiction. Neither of the conditions mentioned in clauses
(f) and (g) referred to above stand satisfied to hold that
the Arbitrator had acted in excess of his jurisdiction in
the present case. The Arbitrator has limited his adjudication
to the points of reference made to him. The Appellant could
not point out in what way or manner the Arbitrator had acted
in excess of his jurisdiction on the matters referred to him.
The Supreme Court rejected the contention of the Appellant
Corporation and made the arbitral award a rule of the court.
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Citation :
(2002) 5 S C C 679
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