Award Passed Without Any Basis Where The Loss Is Quantifiable Is Perverse: Calcutta High Court
The Calcutta High Court observed that an award passed on the basis of guesswork by the tribunal in a situation where the tribunal could arrive at an exact figure is perverse.
The Court said that such awards are against the fundamental policy of Indian Law.
The Court was hearing an Arbitration Petition preferred under Section 34 of the Arbitration and Conciliation Act, 1996 against an award passed by a three-member Arbitral Tribunal.
The bench of Justice Sabyasachi Bhattacharyya observed, “In view of the petitioner having failed to prove the most important component out of those, being the number of damaged bags, there was no occasion for the Arbitral Tribunal to grant any amount to the claimant whatsoever. Thus, this is not a situation where an exact figure cannot be arrived at and the tribunal is compelled to resort to reasonable guess-work, but a case where the Tribunal, relying on no materials basis whatsoever, arbitrarily granted an amount to the claimant. The very absence of any basis vitiates the award by patent perversity.”
Advocate Chayan Gupta appeared for the Appellant and Advocate Suddhasatva Banerjee appeared for the Respondent.
Brief Facts-
The present matter arises out of a claim made by the respondent/claimant for insurance in view of loss suffered due to damage to cement bags stored for the purpose of its business by the respondent, due to waterlogging of its godowns. The tribunal relied solely on a letter by respondents while giving the impugned award. Hence, it was argued in this Petition that the claim was without evidence of proof.
The Court noted that in view of inherent contradiction in the claims of the claimant, no reliance can be placed at all on its unilateral claim as embodied in the letter.
The Court said that in the absence of any proof whatsoever, despite the liability being admitted in principle by the insurer, the Arbitral Tribunal acted in a palpably perverse fashion in granting the claim without any material basis.
The Court compared the present case with observation made in Gambhirmull Mahabirprasad vs. The Indian Bank Ltd and another reported at AIR 1963 Cal 163 and said, “what was being considered was claims which are, by their very nature, were incapable of being assessed with accuracy, such as in respect of pain and suffering, loss of exception of life and loss of a chance of winning a prize…instant lis, the claim made by the claimant was a fully quantifiable amount. The claimant had to prove the exact number of damaged cement bags, the amount of cement in each of such bags and the price of such bags.”
The Court further mentioned the decisions of the Supreme Court in I-Pay Clearing Services Private Limited vs. ICICI Bank Limited reported at (2022) 3 SCC 121 as well as Dyna Technologies Private Limited Vs. Crompton Greaves Limited reported at (2019) 20 SCC 1 and observed, “grounds contemplated in Section 34(4) refer not to cardinal jurisdictional errors but to mere dearth of reasoning on the part of the Tribunal.”
The Court said that there was not a technical defect or scarcity of reason, for which an opportunity might have been given to the Tribunal to cure such defect.
Accordingly, theCourt set aside the award and allowed the Arbitration Petition.
Cause Title: Oriental Insurance Company Limited v. M/s Sarada Rani Enterprises Limited
Appearance:
Appellant: Adv. Chayan Gupta, Adv. Sanjay Paul and Adv. Jaita Ghosh,
Respondent: Adv. Suddhasatva Banerjee, Adv. Dwip Raj Basu, Adv. Aritra Basu and Adv. Ritoban Sarkar