The Judgment of the Court was delivered by

Ashim Kumar Banerjee, J.:—

BACKDROP

These two appeals would arise from a common judgment dated February 10, 2012 passed by the learned Single Judge by disposing of two applications one filed by the respondent in having the award set aside on the ground, although the arbitrator held in his favour, did not award any sum expressing inability and the other also for setting aside of the award made by the appellant as the arbitrator held them responsible for the breach. The learned Single Judge allowed the first application of the respondent by holding, once the arbitrator held in favour of the respondent, he must award consequential sum to do complete justice. His Lordship dismissed the application of the appellant rejecting their prayer for setting aside of the award being not satisfied with the grounds. Learned Judge remitted the award back to the arbitrator for giving consequential relief to the respondent. Hence these two appeals by the appellants. The appellant West Bengal Electronics Industries Development Corporation Limited (hereinafter referred to as WEBEL) entered into an agreement with various franchisees throughout the State including the respondent for providing net access to the common public in their respective Cyber Café for the portal “Banglar Mukh”, a portal belonging to the State. The agreement was titled as “Info-Kiosk license”. The respondent Snehasis Bowmik entered into an agreement with WEBEL on January 6, 2003 whereby WEBEL permitted him to act as franchisee in respect of this Government site “Banglar Mukh” in his Kiosk at the Saraogi Service Station, Cossipore Road, Kolkata. Snehasis claimed, he paid Rs. 40,000 as and by way of license fee apart from spending huge sum for setting up of the Kiosk and making necessary expenses for running the portal. However, the portal could not be accessed by the net users visiting his Cyber Café. He made complain, WEBEL expressed their inability. He prayed for change of place that WEBEL did not agree. He prayed for refund. WEBEL wanted to give credit to a part of it for the next year license fee that Snehasis did not agree. Hence, the dispute. As per the agreement, the dispute would be resolved by the Project Manager to act as sole arbitrator. Accordingly, the then Project Manager entered into reference and ultimately published his award holding WEBEL responsible for the breach. The arbitrator however, did express his inability to grant any monetary relief on the ground that neither the agreement did provide for refund of the license fee nor was any damage contemplated to be awarded in favour of the licensee. Paragraph 13 of the award being relevant herein is quoted below:

“Accordingly, in my capacity to address the issues referred in the matter of the Portal Services, I also maintain that there is no denying of the fact that

a) the relationship between the Respondent and the Claimant has been purely that of the LICENSOR and LICENSEE respectively where the LICENSEE was to make some commercial business out of the promised services/products of the LICENSOR and

b) the LICENSOR has not only i) failed to supply the products/services as promised in the agreement but also ii) has not fulfilled its responsibility of providing the promotional advertisement, as per the agreement, in the newspapers and other appropriate media detailing all the services that would be available through the Kiosks, thereby leading to the failure of the scheme and causing financial damage to the Claimant as the LICENSEE

and therefore, if desired, the claims may be preferred for adjudication under the laws of the land in view of the fact that no clause in the agreement provides for any financial compensation”.

WEBEL filed the application for setting aside inter-alia on the ground, they did not get appropriate opportunity to present their views. Hence the award was one sided. According to WEBEL, arbitrator violated the principles of natural justice by not allowing WEBEL to lead evidence and cross-examine the respondent and thereby misconducted himself and the proceeding. The arbitrator acted without jurisdiction by imposing costs upon them as a precondition to lead further evidence and cross-examine the claimant. He exceeded his authority to decide on the financial claim by holding that the licensee did not fulfill their responsibility of providing promotional advertisements causing loss to the claimant.

Snehasis complained, arbitrator, although held, the WEBEL failed to provide required service, should have awarded consequential financial damage instead of expressing his inability. The learned Single Judge by judgment and order dated February 10, 2012 appearing at page 173-177 dismissed the application of WEBEL and allowed the one filed by Snehasis and remitted the award back to the arbitrator for an appropriate award granting consequential damage. On a close reading of the judgement and order we find, learned Single Judge held, minutes of the meeting of the arbitration would make it clear that several opportunities had been granted to WEBEL that they could not avail. WEBEL was rather reluctant to produce their witness. They failed to cross-examine the respondent. Hence, the arbitrator did not commit any legality. On the question of consequential damage, the learned Judge considered the arbitration Clause and observed, any dispute as regards the license agreement could be raised before the arbitrator and the arbitrator was obliged to come to a definite conclusion. The arbitrator failed in his duty in not assessing the damage.

RIVAL CONTENTIONS

We heard Mr. Dhruba Ghosh, learned Counsel appearing for WEBEL and Mr. Arnab Mazumder, learned Counsel appearing for Snehasis. Mr. Ghosh would contend, the learned Single Judge erred in construing the contract that would provide no compensation. The agreement did not provide refund of license fee at any stage on any eventuality. Hence, the arbitrator was well within his jurisdiction to contend, the agreement did not empower him to award any financial damage. He however, contended, arbitrator should have granted one more opportunity to WEBEL to produce their witness and cross-examine Snehasis on the issue. Having not done so, arbitrator violated the principles of natural justice.

Mr. Arnab Mazumber, learned counsel appearing for Snehasis drew our attention to the minutes of the arbitration to show, ample opportunity had been given to WEBEL to contest the claim that they had failed and neglected. Mr. Mazumder contended, Section 34 of the said Act of 1996 would not empower the Court to sit in appeal over the decision of the arbitrator. The arbitrator construed the contract in the way he would feel best and proper. Such decision was not available to judicial scrutiny. On the construction of the Arbitration Clause Mr. Mazumder would contend, “any” dispute would include all disputes that would arise between the parties in respect of the said contract. He would refer to the dictionary meaning of “any” to show “one or some, no matter how much or how many”. Citing the dictionary meaning, Mr. Mazumder contended, once the arbitrator had held in his favour, he had failed in his duty to award appropriate damage to do complete justice.

He cited the Apex Court decision in the case of Secretary, Irrigation Department, Government of Orissa v. G.C Ray reported in (1992) 1 SCC 508 to say that the arbitrator was within his power to give consequential relief to do complete justice.

While replying Mr. Ghosh contended, however wide the power of the arbitrator, it must be restricted to the terms of the contract. Any travel beyond the contract would amount to misconduct attracting setting aside of the award. According to Mr. Ghosh, the learned Judge thoroughly misconstrued the Arbitration Clause.

CASES CITED

The parties cited the following decisions:-

i) (1999) 9 SCC 283 (Rajasthan State Mines & Minerals Ltd. v. Eastern Engineering Enterprises.

ii) All India Reporter 1992 Supreme Court Page-232 (Associated Engineering Company v. Government of Andhra Pradesh)

iii) 1962 Volume-I Supreme Court Reports Page-9 (The Chief Inspector of Mines v. Lata Karam Chand Thapar)

iv) 2012 Volume-II Calcutta High Court Notes (Supreme Court) Page-119 (P.R Shah, Shares & Stock Broker (P) Ltd. v. B.H.H Securities (P) Ltd.)

v) (2006) 11 SCC 181 (McDermott International Insurance v. Burn Standard Company Limited)

vi) All India Reporter 1965 Mysore Page-227 (Veerappa Shiddalingappa Virupathi v. State of Mysore)

vii) 2001 Volume-III Arbitration Law Reporter Page-550 (Delhi) (Bright Food Industries v. N.D.M.C)

viii) (2007) 8 SCC 466 (Numaligarh Refinery Ltd. v. Daelim Industrial Company Limited.)

CASES DISCUSSED

The decision in the case of Rajasthan State Mines (Supra) was relied upon by Mr. Ghosh to contend that the arbitrator was not entitled to travel beyond the scope of the contract. He particularly referred to paragraph 20, 22 and 30 wherein the Apex Court observed, although the agreement was very widely worded to cover all disputes touching or concerning the contract, the arbitrator would have authority and jurisdiction to travel within the contract. When the contract would provide, no escalation would be granted, granting of escalation would be outside the scope. Identical observations were made by the Apex Court in the case of Associated Engineering (Supra) and Mcdermott (Supra). In the later decision in Mcdermott the Apex Court in paragraph 112 observed, it is trite that the terms of the contract can be expressed or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the Arbitration agreement and they cannot be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties. In short, the Apex Court discussed the wide power of the arbitrator not only to restrict them within the contract but also consider the correspondence exchanged between parties to resolve the controversy.

Mr. Mazumder cited the Apex Court decision in the case of P.R Shah, Shares & Stock Brokers Private Limited (Supra) to contend, challenge to the award could only be restricted to the limited power granted to Court under Section 34(2) of the said Act of 1996. Mr. Mazumder cited two decisions in the case of Lata Karam Chand (Supra) and Veerappa Shiddalingappa Virupathi (Supra) to support his contention on the meaning of the word “any”.

He relied on a Single Bench decision of the Delhi High Court in the case of Bright Food Industries (Supra) to support his contention as to the scope of judicial review on the question of challenge to the reasons and the decision in the case of Numaligarh Refinery (Supra) to contend, Courts should not ordinary substitute their interpretation of the contract that was made by the arbitrator.

OUR VIEW & CONCLUSION

We have considered the rival contentions. We have also carefully perused the agreement. On a close look to the minutes of the arbitration we would have no hesitation to say, WEBEL was not serious in contesting the proceeding. The arbitrator, being an officer of WEBEL, was in great embarrassment when despite repeated opportunities WEBEL did not come to contest the claim. We would have to view this problem from a different angle, particularly, when the learned Single Judge remitted the award to the arbitrator for a limited issue as discussed above. If we dismiss both the appeals the award would again go back to the arbitrator. The arbitrator would have to adjudicate on the issue to find out what would be the actual amount of damage that could be awarded in favour of Snehasis. Such venture would definitely involve witness action and in effect, the issue would again revive. Considering such aspect we feel, the WBEL should get one more opportunity to contest the issue as a whole. In short, once the matter goes back to the arbitrator let there be an open remand that would be in the interest of the parties. At the same time WEBEL must compensate Snehasis for infructuous cost of the earlier arbitration.

Lot was said on the construction of the contract. Cases were cited. We cautiously avoid those as it might prejudice the rights of the parties. We leave it open for the arbitrator to reconsider particularly in the light of the argument that was advanced by the parties on the issues including the one raised by WEBEL. The agreement did not stipulate any refund or damage in case of breach. At the same time, the arbitrator would not overlook, the portal did not function during the relevant period. In this backdrop, we set aside the entire award and remit the issue back to the arbitrator for a fresh hearing. WEBEL would compensate Snehasis for the infructuous arbitration that is assessed at Rs. 40,000 to be paid by WEBEL as a condition precedent in having the entire award set aside. The present Project Manager would enter upon reference within a week from the date of communication of the order. He would publish his award preferably within four months from the date of entering of preference.

The judgment and order of the learned Single Judge impugned is hereby set aside.

The appeal is disposed of accordingly without any order as to costs.

Urgent certified copy of this judgment, if applied for, be given to the parties on their usual undertaking.

Shukla Kabir (Sinha), J.:— I agree.