M/S. NAVODAYA MASS ENTERTAINMENT LTD.versusM/S. J.M. COMBINES

                     [2014] 7 S.C.R. 1098

A        M/S. NAVODAYA MASS ENTERTAINMENT LTD.
                                 v.
                       MIS. J.M. COMBINES
              (Civil Appeal Nos. 7128-7129 of 2011)
                         AUGUST 26, 2014
B
      [M.Y. EQBAL AND PINAKI CHANDRA GHOSE, JJ.]

       Arbitration - Award by arbitrator- Scope of interference ·
  - Held: Is limited - Once arbitrator has applied his mind to
C the matter before him, the Court is not justified in reappraising
  the material on record and substituting its own view in place
  of the Arbitrator's view - Even if two views are possible, the
  view taken by the Arbitrator would prevail - It is only where
  there is an error apparent on the face of the record or Arbitrator
D has not followed the statutory legal position, then and then
  only it would be justified in interfering with the award published
  by the Arbitrator- On facts, on perusal of the clauses of the
  Agreement, the reasoning given by the Division Bench of the
  High Court while affirming the award cannot ·be said to be
E perverse - Award passed by the arbitrator upheld.

       Dispute arose between the parties. In terms of the
  agreement, an arbitrator adjudicated upon the dispute
  and published an award',.The respondent c~allenged the
  award before the High Court with regard to the
F disallowed claim and the appellant challenged the entire
  award before the High Court uls. 34 of the Arbitration and
  Conciliation Act, 1996. The Single Judge of the High
  Court dismissed both the applications .. In appeal, the
  Division Bench of the High Court dismissed the appeal
G filed by the appellant but allowed the appeal filed by the
  first respondent. The -Division Bench of .the High Court
  affirmed 'the award of the Arbitrator, holding that the
  appellant having failed to make the payment of the dues,

H                               1098
  NAVODAYA MASS ENTERTAINMENT LTD. v. J.M. 1099
                COMBINES
as agreed to between the parties, cannot deny the lawful       A
claim of the respondent. Hence the instant appeals

     Dismissing the appeals, the Court

    HELD: 1.1. The scope of interference of the Court is
very limited. Court would not be justified in reappraising     B
the material on record and substituting its own view in
place of the Arbitrator's view. Where there is an error
apparent on the face of the record or the Arbitrator has
not followed the statutory legal position, then and then
only it would be justified in interfering with the award       C
published by the Arbitrator. Once the Arbitrator has
applied his mind to the matter before him, the Court
cannot reappraise the matter as if it were an appeal and
even if two views are possible, the view taken by the
Arbitrator would prevail. [Para 6] [1103-C-E]                  D

     Bharat Coking Coal Ltd. vs. L.K. Ahuja (2004) 5 SCC
109; Ravindra & Associates vs. Union of India (2010) 1 SCC
80; Madnani Construction Corporation Private Limited vs.
Union of India & Ors. (2010) 1 SCC 549; Associated             E
Construction vs. Pawanhans Helicopters Limited (2008) 16
SCC .128; Satna Stone & Lime Company Ltd. vs. Union of
India & Anr. (2008) 14 sec 785 - relied on.

       1.2. On perusal of the clauses of the said Agreement,
  in particular clauses 3 & 5 of the Agreement, it is found    F
  that the reasoning given by the Division Bench of the
  High Court cannot be said to be perverse. Furthermore,
  the appellant never terminated the Agreement or
: requested the first respondent to take back the
  machinery. At this stage it would not be proper to express   G
. further opinion in the matter when the matter/dispute has
  already been concluded by the Arbitrator and the award
'.has been affirmed by the High Court. Under these
' circumstances, there is no merit in these appeals. [Para
  7,8) [1103-G-H; 1104-A-B]                                    H
    1100     SUPREME COURT REPORTS               [2014] 7 S.C.R.


A                        Case Law Reference:
        (2004) 5 sec 109           Relied on           Para 6
        (2010) 1 sec 80            Relied on           Para 6
        (2010) 1 sec 549           Relied on           Para 6
B
        (2008) 1 s sec 128         Relied on           Para 6

        (2008) 14 sec 785          Relied on           Para 6

        CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
c 7128-7129 of 2011.
         From the Judgment and Order dated 01.09.2009 of
    Madras High Court in OSA No. 34 of 2009 and OSA No. 140
    of 2009.
D
         Jos Chiramel, Anish Kumar Gupta, Pankaj Kumar Dua for
    the Appellant.

         G. Umapathy, Rakesh K. Sharma, S. Ramsubramanian for
    the Respondent.
E
        The Judgment of the Court was delivered by

         PINAKI CHAN!?RA GHOSE, J. 1. These appeals have
    been filed assailing the common judgment and order dated
    1.9.2009 passed by the Madras High Court in O.S.A. Nos.34
F   of 2009 and 140 of 2009 by which the High Court while allowing
    O.S.A. No.34 of 2009 filed by Respondent No.1, dismissed
    O.S.A. No.140 of 2009 filed by the appellant herein. The facts
    of the case briefly stated are as follows:

G       2. The appellant offered a business proposal to the first
  respondent herein and they entered into an agreement on July
  30, 1998, whereby it was agreed that the first respondent shall_
  procure, install and operate an-amusement ride for both adults
  and children called "SLAMElOB:' in the amusement park
H "Kishkinta" which was maintained by the appellant. The
  NAVODAYA MASS ENTERTAINMENT LTD, v. J.M. 1101
    COMBINES [PINAKI CHANDRA GHOSE, J.]
Agreement also provided that the first respondent shall maintain        A
the eq·uipment by effecting necessary repairs etc. The
Agreement further provided that the collection from the ride
would be shared in the ratio of 60:40 by the first Respondent
 and the appellant in the first year of its operation, and thereafter
 in the ratio of 50:50 in the subsequent years. It also provided        B
 for a guaranteed minimum gross collection of Rs.10 lakhs for
 the first year and Rs.8.33 lakhs for the subsequent 9 years. The
 Agreement was in force for a period of 10 years and could be
 renewed/terminated as per the terms thereof. Pursuant to the
 Agreement, the first respondent installed the equipment on             c
 16.04.1999 and it started functioning from the said date. The
 appellant defaulted in making the payments from the year
 2000-2001 onwards. Despite. repeated demands, the appellant
.faHed to make the payments, hence notice was served to the
 appellant calling upon the appellant to pay the outstanding            0
 amount, along with interest at the rate of 24% per annum.

      3. In these circumstances, dispute arose between the
parties which was covered under the said Agreement by
arbitration clause and accordingly an Arbitrator was appointed.
The first respondent filed a claim for .a sum of Rs.13,94,240/~         E
together with interest on 16.10.2006. The Arbitrator published
his award allowing the claim to the tune of Rs.13,94,240/- with
interest at the rate of 12% per annum, but disallowed the
Minimum Guaranteed amount of Rs.69,416/- per month for the
remaining 69 months, commencing from July, 2003. Aggrieved              F
by the award in respect of the disallowed claim, the first
respondent challenged the award before the Madras High Court
under by filing O.P. No.37 of 2007 and aggrieved over the entire
award, the appellant challenged the same before the Madras
High Court by filing O.P. No.362 of 2007 under Section 34 of            G
the Arbitration and Conciliation Act, 1996. The learned Single
Judge of the Madras High Court dismissed both these
applications. Aggrieved by the order passed by the learned
Single Judge of the High Court, appeals were filed by both the
 parties before the Division Bench of the High Court. The High          H
    1102     SUPREME COURT REPORTS                 [2014] 7 S.C.R.

A Court by a common judgment and order dated 1.9.2009
  dismissed the appeal filed by the appellant but allowed the
  appeal filed by t~e first respondent herein. The High Court after
  scrutinizing all the materials placed before it came to the
  conclusion that it is not in controversy that the Agreement was
B entered into between the parties on July 30, 1998. The parties
  also agreed to the ratio in which the collection of the amusement
  riae was to be shared and the said Agreement was in force
  for a period of 1O years and was also renewable. The
  Agreement also stipulated for a guaranteed minimum gross
c collectio·n of Rs.1 Olakhs for the first year and Rs.8.33 lakhs for
  the subsequent 9 years.

       4. The Division Bench of the High Court affirmed the award
  of the Arbitrator. The High Court ·particularly held that the
  appellant having failed lo make the payment of the dues, as
D agreed to between the parties, cannot deny the lawful claim of
  the respondent and accordingly the High Court upheld the
  reasoning of the Arbitrator and dismissed the appeal filed by
  the appellant. The Division Bench of the High Court also held
  that the award of interest at the rate of 12% per annum was
E also just.and reasonable and accordingly affirmed the same.
  In these circumstances, the appeal filed by the first respondent,
  being OSA No.34 of 2009, was allowed and the appeal filed
  by the appellant, being OSA No.140 of 2009, was dismissed
  by the Division_ Bench of the High Court.
F
       5. We have perused the order passed by the Division
  Bench of the High Court. We have also heard the learned
  counsel for the partjes. Learned counsel appearing on behalf
  of the appellant submitted that the Arbitrator and the Courts
G have failed to appreciate the fact that the claim was not on
  revenue sharing basis i.e. the gross income but it was on the
  basis of minimum guaranteed amount stated in the petitions.
  Learned counsel appearing on behalf of the appellant tried to
  argue before us that the alleged Agreement was not legal, valid
  and enforceable .. He further submitted that the same was one-
H
  NAVODAYA MASS ENTERTAINMENT LTD. v. J.M. 1103
    COMBINES [PINAKI CHANDRA GHOSE, J.]
sided Agreement. He also submitted that the Division Bench             A
of the High Court ignored and overlooked clause 14 of the
Agreement which deals with the termination of the Agreement
by the conduct of the parties. We are afraid that such points,
as has been tried to be contended before us, it appears, were
never urged before the learned Single Judge or before the              B
Division Bench of the High Court. The dispute between the
parties has been adjudicated upon by the Arbitrator and the
award has been published. The Division Bench of the High
Court has found that the award cannot be said to be perverse
or that there is any cogent reason to set aside the same.              c
     6. In our opinion, the scope of interference of the Court is
very limited. Court would not be justified ·in reappraising the
material on record and substituting its own view in place of the
Arbitrator's view .. Where there is an error apparent on the face
of the record or the Arbitrator has not followed the statutory legal   D
position, then and then only it would be justified in interfering
with the award published by the Arbitrator. Once the Arbitrator
has applied his mind to the matter before him, the Court cannot
reappraise the matter as if it were an appeal and even if two
views are possible, the view taken by the Arbitrator would             E
prevail. (See: Bharat Coking Coal Ltd. Vs. L.K. Ahuja, (2004)
5 SCC 109; Ravindra & Associates Vs. Union of India, (2010)
:t SCC 80; Madnani Construction Corporation Private Limited
Vs. Union of India & Ors., (2010) 1 SCC 549; Associated
Construction Vs. Pawanhans Helicopters Limited, (2008) 16              F
SCC 128; and Satna Stone & Lime Company Ltd. Vs. Union
of India & Anr., (2008) 14 SCC 785.)

      7. We have also perused the clauses of the said
Agreement, in particular clauses 3 & 5 of the Agreement. We            G
find that the reasoning given by the Division Bench of the High
Court cannot be said to be perverse. Furthermore, the appellant
never terminated the Agreement or requested the first
respondent to take back the machinery. Now, at this stage it
would not be proper for us to express further opinion in the           H
   1104         SUPREME COURT REPORTS          [2014] 7 S.C.R.

A matter when the matter/dispute has already been concluded by
  the Arbitrator and the award has been affirmed by the High
  Court.
      8. Under these circumstances, we do not find that there is
  any merit in these appeals. The same stand dismissed.
8
  However, the parties shall bear their own costs.

   Nidhi Jain                                   Appeals dismiseed.