1 APHC010409732007 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3508] TUESDAY ,THE TWENTY FIRST DAY OF JANUARY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO THE HONOURABLE SRI JUSTICE MAHESWARA RAO KUNCHEAM CIVIL MISCELLANEOUS APPEAL NO: 344/2007 Between: Food Corporation Of India ...APPELLANT AND Great Eastern Shipping Company Ltd Anr and Others ...RESPONDENT(S) Counsel for the Appellant: 1. S SYAMSUNDER RAO Counsel for the Respondent(S): 1. M/S INDUS LAW FIRM The Court made the following: (per Hon’ble Sri Justice R. Raghunandan Rao) ORDER: The appellant herein had entered an agreement with the 1st respondent for carriage of 20,000 tons of wheat from Sydney, Australia to ports in India in the year 1976. In pursuance of this agreement, the 1st respondent carried 20056.00 metric tons of wheat in vessel M.V. Jag Dharma from the port of Sydney, Australia on 29.11.1976. The wheat was discharged, in Visakhapatnam port, between 16.12.1976 and 27.12.1976. 2 2. At the stage of discharging of cargo, it was found that 251.53 metric tons of wheat had been damaged due to seepage of water. The value of the damage was fixed at Rs.3,73,619.65/- by M/s. Erickson and Richards (Andhra) surveyors who had conducted a comprehensive survey of the damaged wheat. Further, costs were also sought to be recovered by the surveyors towards survey charges and the cost of charges of Majdoors etc. 3. The appellant, claimed these damages from the 1st respondent, who refused to pay these damages, on the ground that there was no negligence on its part. Consequently, the matter was referred to an Arbitral Tribunal consisting Sri P. G. Gokha and S. A. Paingankar, Bombay. Since the arbitrators differed on the result of the arbitration, the matter was referred to Sri R.S. Cooper as an Umpire. Thereupon, an award was passed by Sri R.S. Cooper on 06.07.1984, granting compensation to the appellant. Accordingly, the appellant moved an application, under Section 17 of Arbitration Act, 1940, to make the said award a rule of Court. In turn, the 1st respondent moved an application under Section 30 & 33 of the Arbitration Act, 1940 to set aside the award. Both these petitions i.e., O.P.Nos.229 of 1986 and 195 of 1986 were disposed of by the Principal Subordinate Judge, Visakhapatnam, by allowing O.P.No.229 of 1986, filed by the appellant, and dismissing O.P.No.195 of 1986, filed by the 1st respondent. The appeal, filed against this order, was allowed by the Hon’ble High Court of A.P. The appellant thereupon filed an appeal before the Hon’ble the Supreme Court. 4. The Hon’ble Supreme Court, after hearing the matter, was pleased to dispose of the appeal by appointing the 2nd respondent herein as an Umpire. 5. The 2nd respondent, after hearing both sides, had disallowed the claim of the appellant by way of his award dated 04.03.2002. The award was communicated to the parties, by his letter dated 19.03.2002. 6. The appellant, being aggrieved by the award of the 2nd respondent in disallowing its claim, approached the Court of Principal Senior Civil Judge, 3 Visakhapatnam, by way of O.P.No.8 of 2002, under Section 30 & 33 of Arbitration Act, 1940. The trial Court, after hearing both sides, dismissed the petition filed by the appellant and made the award dated 04.03.2002, rule of the Court. Aggrieved by this order dated 10.11.2006, the present appeal has come to be filed. 7. Shorn of details, the basic case of the appellant is that the burden of demonstrating that the damage to the wheat was not on account of short comings of the 1st respondent, had not been discharged by the 1st respondent; the finding of the 2nd respondent arbitrator that the damage to the wheat occurred on account of the gale, which the vessel went through during the period 30.11.1976, as the probable cause is not backed by proper appreciation of evidence; the observations of the 2nd respondent arbitrator, that Article 4 Rule 2 (C) of the Australia Carriage of Goods by Sea Act, 1924 would cover the present situation, absolving the 1st respondent from all liability, is not in accordance with facts of the case. 8. Sri Syam Sundar, learned Counsel appearing for the appellant, would contend that for all the aforesaid reasons, the award of the arbitrator requires to be set aside and the refusal of the trial Court in setting aside the award is clearly a violation of Section 30 & 33 of Arbitration Act, 1940. 9. Sri Amitava Majumdar, learned counsel appearing for the 1st respondent, relying upon the judgment of the Hon’ble the Supreme Court in NTPC Limited Vs. Deconar Services Private Limited1, would contend that none of the objections raised by the appellant, fall within the grounds that are available under Section 30 & 33 of Arbitration Act, 1940. He would further submit that the 2nd respondent arbitrator, by way of an elaborate award consisting of 56 pages, had considered every contention raised by the appellant and had answered the same strictly in accordance with law. He would also contend that the findings of the 2nd respondent arbitrator, relating 1 (2021) 19 SCC 694 4 to the facts of the case, did not require any interference, as there are reasonable conclusions which can be drawn by a person who is well versed with maritime voyages and shipment rules and as such nothing further remains for consideration. 10. The Hon’ble Supreme Court in National Thermal Power Corporation Private Limited, while considering the scope of interference by Courts, in an award passed under Arbitration Act, 1940, had held as follows: “10. On the other hand, the learned counsel for the respondent supported the impugned judgment passed by the High Court and stated that there are concurrent findings against the appellant, who has only been prolonging the litigation. The respondent submitted that the scope of interference in an arbitral award was limited, as the Court did not sit in appeal over an award. As long as the arbitrator has taken a reasonable view, the Court should not interfere in the same. 11. Before proceeding further, it is necessary to make note of the scope of interference by courts in arbitral awards passed under the Arbitration Act, 1940. This Court has consistently held that the Court does not sit in appeal over an award passed by an arbitrator. In Kwality Mfg. Corpn. v. Central Warehousing Corpn., this Court held as follows. 10. At the outset, it should be noted that the scope of interference by courts in regard to arbitral awards is limited. A court considering an application under Section 30 or 33 of the Act, does not sit in appeal over the findings and decision of the arbitrator: Nor can it reassess or reappreciate evidence or examine the sufficiency or otherwise of the evidence. The award of the arbitrator is final and the only grounds on which it can be challenged are those mentioned in Sections 30 and 33 of the Act. Therefore, on the contentions urged, the only question that arose for consideration before the High Court was, whether there was any error apparent on the face of the award and whether the arbitrator misconducted himself or the proceedings.” 12. Further, it is also a settled proposition that where the arbitrator has taken a possible view, although a different view may be possible on the same evidence, the court would not interfere with the award. This Court in Arosan Enterprises Ltd. V. Union of India, held as follows: (SCC p.475, paras 36-37) 36. Be it noted that by reason of a long catena of cases, it is now a well-settled principle of law that reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the court to reappraise the evidence is unknown to proceedings under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the court would not arise at all. In the event, 5 however, there are reasons, the interference would still be not available within the jurisdiction of the court unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. In the event however two views are possible on a question of law as well, the court would not be justified in interfering with the award. 37. The common phraseology “error apparent on the face of the record” does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record. The Court as a matter of fact, cannot substitute its evaluation and come to the conclusjion that the arbitrator had acted contrary to the bargain between the parties. If the view of the arbitrator is a possible view the award or the reasoning contained therein cannot be examined.” 13. From the above pronouncements, and from a catena of other judgments of this Court, it is clear that for the objector/appellant in order to succeed in their challenge against an arbitral award, they must show that the award of the arbitrator suffered from perversity or an error of law or that the arbitrator has otherwise misconducted himself. Merely showing that there is another reasonable interpretation or possible view on the basis of the material on the record is insufficient to allow for the interference by the court [see State of U.P. v. Allied Constructions: Ravindra Kumar Gupta & Co. v. Union of India and Oswal Woollen Mills Limited v. Oswal Agro Mills Ltd.] 11. Applying these principles, this Court would now have to look whether the award of the 2nd respondent arbitrator requires any interference. 12. The 2nd respondent arbitrator framed 11 issues after hearing both parties in this regard. The said 11 issues are as follows. “1. Do the Claimants prove that a quantity of 251.554 MT of wheat was found to have been discharged from M. V. Jag Dharma in damaged condition as alleged in para 7 of the Statement of Claim and denied by the Respondents in para 5 of their Counter Statement ? 2. Do the Claimants prove contents and the correctness of the contents of the survey report of Ericson & Richards (Andhra) dated 31.12.1976 bearing No.76/148 ? 3. Do the Respondents prove that they are entitled to any immunity under Article IV Rule 2(C) of the Australian Carriage of Goods by Sea Act, 1924 as averred by them in Para 5 of their Counter Statement ? 4. Do the Respondents prove that they are entitled to an immunity under Article IV Rule 2(C) of the Australian Carriage of Goods by Sea Act, 1924 as averred by them in Para 7A of their counter Statement ? 6 5. Do the Claimants prove that the cost, freight and insurance ofthe allegedly damaged cargo was Rs.3,60,871.06 and the Respondents are liable for payment of the same as averred by them in Para 7 of their Statement of Claims ? 6. Do the Claimants prove that they have incurred Rs.2,745/- towards the survey charges and the Respondents are liable for payment of the same ? 7. Do the Claimants prove that they had engaged 105 extra Dock Labour Board workers for discharging the damaged cargo, have paid a sum of Rs.5,298.75 for that purpose and are entitled to recover the sum from the Respondents ? 8. Are Claimants entitled for Rs.4,704.85 as extral lay time in discharging the cargo and that the Respondents are liable for payment of the same ? 9. Do the Claimants prove that the master of the Ship and the Crew were required in law and in contract to make the ship seaworthy, properly equip it and make it safe and fit for the carriage fo cargo, as averred in the Rejoinder ? 10. Do the Claimants prove that the Ship had taken a course that was known for stormy weather as averred in the Rejoinder ? 11. Do the Claimants prove that the Ship was unseaworthy as averred in the Rejoinder?” 13. Thereafter, the 2nd respondent arbitrator after receiving all the documents that are sought to be tendered, by both parties, also recorded oral evidence of an expert. Apart from this, the 2nd respondent arbitrator also looked into the recorded submissions made earlier, produced by the counsel for the appellant. 14. The 2nd respondent arbitrator, after noticing the fact that 247.592 metric tons of wheat had been damaged on account of seepage of sea water had gone into the question of how such seepage may have occurred. After going through the evidence and hearing both sides, the 2nd respondent arbitrator took a view that the seepage of water appears to have occurred primarily on account of the severe and adverse weather conditions encountered by the vessel from 30.11.1976 to 03.12.1976. The said finding was given by the 2nd 7 respondent arbitrator on the basis of the note produced along with the port to port report that was placed before him, in relation to the vessel in question. 15. The 2nd respondent arbitrator also rejected the contention of the learned counsel for the appellant, that breakage of forecastle ventilator etc., is an afterthought. The 2nd respondent arbitrator has also given this finding as to why such a contention was rejected. 16. The learned counsel for the appellant had also taken the stand that the vessel had to go through such adverse weather on account of the change of route taken by the vessel and that such change in the route was unnecessary. This contention was also considered by the 2nd respondent arbitrator, who held that such change was not, in any manner an unnecessary change, which could have resulted in damage to the wheat. 17. We have gone through the award and find that the 2nd respondent arbitrator has given specific findings as to the cause of damage. We also find that the 2nd respondent arbitrator, after giving these findings of fact, has taken the view that the damage to the wheat was not on account of negligence on the part of the 1st respondent and the same would have to be put down to extreme weather conditions, and that the 1st respondent cannot be made liable for said damage, on account of the protection offered by article 4 Rule 2(a) (C) of the Australia Carriage of Goods by Sea Act, 1924. 18. We find the conclusion drawn by the 2nd respondent arbitrator to be reasonable conclusion that can be drawn by any person exercising discretion and we do not find any reason to differ from the said conclusion. The scope of interference of this Court, under Section 30 & 33 of Arbitration Act, is to interfere when extreme or unreasonable conclusions are drawn by an arbitrator and where the Court finds that such conclusions cannot be drawn in the normal course. In the present case, we did not find any such unreasonable conclusions drawn by the 2nd respondent arbitrator. 8 19. For all the aforesaid reasons, we do not find any reason to interfere with the award of the 2nd respondent arbitrator and the judgment of the trial Court, which is in appeal before us. 20. Accordingly, this Civil Miscellaneous Appeal is dismissed. No costs. As a sequel, pending miscellaneous applications, if any, shall stand closed. _______________________ R RAGHUNANDAN RAO,J ______________________________ MAHESWARA RAO KUNCHEAM,J Date: 21.01.2025 ANS 9 429 THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO THE HONOURABLE SRI JUSTICE MAHESWARA RAO KUNCHEAM CIVIL MISCELLANEOUS APPEAL NO: 344/2007 Date: 21.01.2025 ANS