SWAN GOLD MINING LTD.versusHINDUSTAN COPPER LTD.

                    [2014] 10 S.C.R. 559


                 SWAN GOLD MINING LTD.                              A
                              v.
                 HINDUSTAN COPPER LTD.
               (Civil Appeal No. 9048 of 2014)
                   SEPTEMBER 22, 2014
                                                                    B
   [M.Y. EQBAL AND PINAKI CHANDRA GHOSE, JJ.]

    ARBITRATION ACT, 1996:

     s.34 - Setting aside of arbitral award - Power of court to     c
set aside the award would be exercised only in cases where
court finds that arbitral award is on the fact of it erroneous or
patently illegal or in contravention of the provisions of the Act
- Arbitrator is the final judge of facts - The finding of facts
recorded by him cannot be interfered with on the ground that        D
the terms of contract were not correctly interpreted by him.

     s.34(2)(b)(ii) - Arbitral award challenged as opposed to
public policy - Court is precluded from re-appreciating the
evidence and to arrive at different conclusion by holding that
the. arbitral award is against the public policy.                   E
     Dismissing the appeal, the Court

     HELD: 1.1. Arbitrator's decision is generally
considered binding between the parties and, therefore,
the power of the court to set aside the award would be              F
exercised only in cases where the court finds that the
arbitral award is on the fact of it erroneous or patently
illegal or in contravention of the provisions of the Act.
Court shall not ordinarily substitute its interpretation for
that of the Arbitrator. [para 12] [565-F-G]                         G

    1.2. Similarly, when the parties have arrived at a
concluded contract and acted on the basis of those terms
and conditions of the contract then substituting new
                          559                                       H
    560     SUPREME COURT REPORTS             [2014] 10 S.C.R.


A terms in the contract by the Arbitrator or by the court
  would be erroneous or illegal. Arbitrator appointed by the
  parties is the final judge of the facts. The finding of facts
  recorded by him cannot be interfered with on the ground
  that the terms of the contract were not correctly
8 interpreted by him. [para 12-13] [565-H; 566-A-B]
       1.3. In the instant case, in the letter of intent, in
  continuation of which the work contract was issued, it
  was specifically mentioned that the execution of work
  shall be on the terms of notice inviting tender (NIT) and
C other agreed discussions/negotiations subsequently
  held between the parties. Finally the Work Order was
  issued in continuation with the letter of intent. The
  appellant has accepted the liability of payment of excise
  duty, sales tax, service tax and other taxes and, therefore,
D it cannot be held that clause 4.9.1 of the Work Order is
  inconsistent with the terms and conditions of contract
  documents. The Arbitrator has rightly come to the
  conclusion that the responsibility on the appellant is to
  abide by the terms and conditions of the Work Order. The
E High Court has rightly held that there is no patent
  illegality in the Award passed by the Arbitrator and, as
  such, it needs no interference u/s 34 of the Act. [para 16,
  18, 19 and 20] [567-F; 568-F-H; 569-A]

F      2.1. The words "public policy" or "opposed to public
  policy", find reference in s.23 of the Contract Act and also
  s.34 (2)(b)(ii) of the Arbitration and Conciliation Act, 1996.
  Interpretation of the contract is matter of the Arbitrator,
  who is a Judge, chosen by the parties to determine and
  decide the dispute. Court is precluded from re-
G appreciating the evidence and to arrive at dUferent
  conclusion by holding that the arbitral award is against
  the public policy. [para 22] [569-F-G]

      2.2. In the instant case, the parties have entered into
H concluded contract, agreeing to terms and conditions of
SWAN GOLD MINING LTD. v. HINDUSTAN COPPER 561
                  LTD.
the said contract, which was finally acted upon. In such             A
a case, the parties to the said contract cannot back out
and challenge the award on the ground that the same is
against the public policy. Even assuming the ground
available to the appellant, the award cannot be set aside
because it is not contrary to fundamental policy of Indian           B
law or against the interest of India or on the ground of
  atent illegality. [para 21] (569-D-E]

    Oil and Natural Gas Corporation Ltd. vs. Saw Pipes Ltd.
                    =
2003 (3) SCR 691 (2003) 5 SCC 705 - held inapplicable.               C
                      Case Law Reference:
    2003 (3) SCR 691            held inapplicable     para 9
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
9048 of 2014.                                                        D

    From the Judgment and Order dated 19.09.2012 in APO
No. 280 of 2012 of the High Court at Calcutta.

   A. Sharan, Amit Kumar, Atul Kumar, Ankit Rajgarhia,
                                                                     E
Somesh Jha for the Appellant.

    P.P. Rao, Deba Prasad Mukherjee, Nandini Sen for the
Respondent.

     The Judgment of the Court was delivered by                      F
     M.Y. EQBAL, J. 1. Leave granted.

     2. This appeal by special leave is directed against the
judgment and order dated 19.9.2012 passed by the Division
Bench of the Calcutta High Court whereby appeal preferred by         G
the appellant against the order of learned Single Judge of the
High Court was dismissed. Learned Single Judge had
dismissed the appellant's petition under Section 34 of the
Arbitration and Conciliation Act (in short, 'the Act') challenging
the award of the Arbitrator.                                         H
    562     SUPREME COURT REPORTS                 [2014] 10 S.C.R.


A       3. The case of the appellant is that a notice inviting tender
  (NIT) was issued by the respondent-Hindustan Copper Ltd.
  inviting offers for operation of its Surda Mine and Mosabani
  Concentrator Plant. Respondent-company was having several
  mines rich with natural resources being metallic ores. The global
B tender floated by the respondent provided that it shall be the
  responsibility of successful bidder for payment of all statutory
  duties. The appellant-company submitted its technical and
  financial bids. It is contended on behalf of the appellant that the
  NIT contained a techno commercial bid and a separate price
c bid. Price bid of the appellant provided that any Excise Duty/
  Service taxes or any levy presently applicable or any variation
  or new levy in future to be reimbursed on actual basis.

       4. After negotiation and acceptance of the final price offer,
  on 3.3.2007 respondent issued a Letter of Intent to the appellant
D on the terms and conditions of the NIT and other terms agreed
  during subsequent discussions/negotiations. Finally, on
  26.3.2007 a contract was executed between the parties for re-
  commissioning and operation of the Surda Mine and Mosabani
  Concentrator Plant. Thereafter, a work order was issued on
E 14.4.2007 and the appellant raised its Invoices on 31.12.2007,
  by which reimbursement of basic excise duty and other duties ·
  payable by the appellant to the Government was sought. On
  refusal by the respondent to make payment in respect of excise
  duty and other taxes paid by the appellant relating to the work
F executed, the arbitration clause was invoked and the dispute
  was referred to a sole Arbitrator, who after considering the
  pleadings and evidence led by the parties, held that the price
  bid of the appellant was not exclusive of applicable taxes.
  Learned Arbitrator held that the clause relating to payment of
G taxes was deleted by the appellant's representative Mr. Ahlawat
  on 19.1.2007 and since work order was acknowledged, it is
  binding on the appellant.

        5. The appellant challenged the award by way of filing
H petition under Section 34 of the Arbitration and Conciliation Act
SWAN GOLD MINING LTD. v. HINDUSTAN COPPER 563
           LTD. [M.Y. EQBAL, J.]
before the Calcutta High Court on the grounds inter alia of        A
perversity and contrary to law. Learned Single Judge of the High
Court upholding the award and reasons assigned by the
learned Arbitrator, dismissed appellant's petition. Aggrieved by
the decision of the learned Single Judge, appellant preferred
appeal before the Division Bench of th~ .High Court, which         B
although upheld the contention of. the apP~llant relating to the
evidence on the issue of deviation in price bid on 19.1.2007,
dismissed the Appeal on the ground of terms contained in NIT
and Work Order being in consonance with each other. Hence,
this appeal by special leave by the Australian company.            c
      6. Mr. Amarendra Sharan, learned senior counsel
appearing for the appellant assailed the award and the
impugned order passed by the High Court on various grounds.
Learned counsel contended that the appellant is a reputed
Australian Mining Company and it submitted bid in response         D
to NIT. The price bid submitted by the appellant provided for
"base price plus 55%" and that any excise duty/service tax or
any levy to be reimbursed on actual basis. A meeting of the
Tender Evaluation Committee of the respondent-company with
the bidders was held on 18.1.2007 and 19.1.2007 and the            E
respondent did not object to the price bid submitted by the
appellant which was exclusive of taxes. It is further contended
by the senior counsel that after opening of price bid, although
the respondent made a request to lower the bid price, there
was no request to change provision relating to taxes mentioned     F
in the price bid by which respondent was liable to reimburse
taxes. The appellant-company submitted the revised bid on
27.1.2007 and reduced the percentage from 55% to 50% (over
the base price) and reiterated its earlier offer of payment of
taxes by the respondent. After further negotiation and reduction   G
 of price bid to "base price plus 49%", respondent issued Letter
 of Intent on 3.3.2007 and the contract was signed between the
 parties on 26.3.2007.

     7. Learned senior counsel contended that on 14.4.2007
                                                                   H
    564      SUPREME COURT REPORTS               [2014] 10 S.C.R.


A Work Order was issued with its Clause 4.9, which provided for
  payment of taxes by the appellant. For the settlement of
  disputes pertaining to taxes and duties, appellant invoked
  clause 4.14 of NIT and sought appointment of Arbitrator where
  it was claimed by the appellant that price bid submitted by the
B appellant is exclusive of taxes and clause 4.9.1 of Work Order
  is inoperative and:·~oid. Tllis claim was dismissed by the
  Learned Arbitrator on the ground that the clause relating to
  payment of taxes was denied by the appellant's representative
  Mr. Ahlawat on 19.1.2007 and since the work order was
c acknowledged, it is binding on the appellant.

        8. Mr. Sharan has submitted that there had never been any
  negotiation with regard to the liability of payment of excise
  duties and taxes as the same was finally concluded to the effect
  that the taxes shall be liable to be reimbursed by the
D respondent. The negotiation was only with respect to the
  percentage which was finally reduced to 49%. It is submitted
  that the respondent gave a calculation which does not include
  taxes. All these backgrounds have neither been considered by
  the Arbitrator nor by the High Court. It was submitted that non
E consideration of the offer, counter offer and letter of acceptance
  by the Arbitrator amounts to serious error and patent illegality
  in the Award. NIT is only invitation to offer, which has been
  superseded by subsequent offers and counter offers and hence,
  NIT cannot become the contract. Lastly, Mr. Sharan contended
F that work order is a unilateral document and there was no
  consensus ad idem on the Work Order.

       9. Mr. Sharan, learned counsel put heavy reliance on the
  decision of this Court in the case of Oil and Natural Gas
G Corporation Ltd. vs. Saw Pipes Ltd., (2003) 5 SCC 705, and
  submitted that if the Award is contrary to the substantive
  provision of law, or the provisions of fact or against the terms
  of contract, it would be patently illegal and could be interfered
  under Section 34 of the Act. Mr. Sharan finally contended that
  the parties have expressly agreed that the bid price shall be
H
SWAN GOLD MINING LTD. v. HINDUSTAN COPPER 565
           LTD. [M.Y. EQBAL, J.]
exclusive of the duty of taxes, deviation from such contract will       A
go to the root of the matter and on that ground Award could be
set aside if it is so unfair and unreasonable. This will also be
opposed to the public policy and required to be adjudged void.

      10. Per contra, Mr. P.P. Rao, learned senior counsel for          8
the respondent, firstly submitted that the Award cannot be set
aside except where the Award on the face of it suffers from
patent illegality and perversity. As the learned single Judge and
tile Division Bench after re-appreciation of the entire facts and
documents came to the conclusion that no ground exists to set
aside the Award, this Court should not interfere with the order         C
of the High Court.

      11. Learned senior counsel drawn our attention to various
documents including NIT, initial bid proceedings of the meeting,
revised bid, offer and counter offers, on the basis of which the        D
letter of intent was issued. Finally, the Work Order was issued
and a contract was signed by both the parties. These
documents would show that the appellant was made liable f6r
payment of duty and taxes, which were inclusive of the bid price
arrived at between the parties.                                         E

     12. Section 34 of the Arbitration and Conciliation Act, 1996
corresponds to Section 30 of the Arbitration Act, 1940 making
a provision for setting aside the arbitral award. In terms of sub-
section (2) of Section 34 of the Act, an arbitral award may be
                                                                        F
set aside only if one of the conditions specified therein is
satisfied. The Arbitrator's decision is generally considered
binding between the parties and therefore, the power of the
Court to set aside the award would be exercised only in cases
where the Court finds that the arbitral award is on the fact of it
erroneous or patently illegal or in contravention of the provisions     G
of the Act. It is a well settled proposition that the Court shall not
ordinarily substitute its interpretation for that of the Arbitrator.
Similarly, when the parties have arrived at a concluded contract
and acted on the basis of those terms and conditions of the
contract then substituting new terms in the contract by the             H
    566       SUPREME COURT REPORTS                 [2014] 10 S.C.R.


A Arbitrator or by the Court would be erroneous or illegal.

         13. It is equally well settled that the Arbitrator appointed
    by the parties is the final judge of the facts. The finding of facts
    recorded by him cannot be interfered with on the ground that
8   the terms of the contract were not correctly interpreted by him.

        14. We have gone through the facts of the case and
    perused the documents on the basis of which the Arbitrator
    gave the Award on 24.7.2009.

c        15. The respondent issued notice inviting tender (NIT) for
    the operation of its mine. Clauses 4.9.1 to 4.9.5 of the NIT are
    extracted hereinbelow:-

          "4.9.1. The rates quoted by the successful bidder shall be
          deemed to be (inclusive) of the sales taxes, other taxes
D
          and service tax that the successful bidder will have to pay
          in India & Abroad for the performance of this contract. HCL
          will perform such duty regarding the deduction of such
          taxes at source as per applicable laws.

E         4.9.2. The successful bidder shall also be responsible to
          bear and pay any taxes, cess, fees and/or duties levied
          including but not limited to interest, penalty and/or fine
          imposed by any authorities including revenue authorities
          in India and/or abroad at any time even beyond the expiry
F         of the Contract period with respect of the work to be
          performed by the successful bidder in accordance with the
          Contract.

          4.9.3. The successful bidder shall also be responsible for
          filing income tax return and/or complying with necessary
G
          procedure and/or formalities as required or may be
          required under the fiscal laws of India and/or abroad in
          respect of the work to be performed by the successful
          bidder in accordance with the Contract.

H         4.9.4. Corporate Tax and/or Income Tax, if any applicable/
SWAN GOLD MINING LTD. v. HINDUSTAN COPPER 567
           LTD. [M.Y. EQBAL, J.]
    levied in India and/or abroad on the successful bidder and/      A
    or its personnel and/or on the sub-contractors engaged by
    the successful bidder and /or the personnel of such sub-
    contractors in respect of this contract will be the
    responsibility of the successful bidder. All the necessary
    return and other formalities will be the responsibility of       B
    successful bidder.

    4.9.5. All other statutory levies including but not limited to
    Custom Duties/Excise Duties, Sales Taxes, Works
    Contract and other levies of whatsoever nature payable in        C
    accordance with the law of India, levied/leviable on the
    successful bidder and/or its sub-contractors in respect of
    performance of this contract shall be the responsibility of
    the successful bidder or any of its sub-contractors."

     16. The appellant in response to NIT submitted its              D
technical and financial bids. Subsequent to submission of the
technical bid and the price bid, the parties entered into
negotiation and thereafter a letter of intent on the terms and
conditions of NIT and the other terms agreed during subsequent
negotiations was issued. In the said letter of intent dated          E
3.3.2007, it was specifically mentioned that the execution of
work shall be on the terms of notice inviting tender (NIT) and
other agreed discussions/negotiations subsequently held
between the parties. Finally the Work Order was issued on
14.4.2007 in continuation with the letter of intent dated            F
3.3.2007. The relevant portion of the work order is extracted
herein-below:-

                       "WORK ORDER

    SUB:- Re-opening and operating of Sudra Mine &                   G
    Mosaboni concentrator plant at Indian Copper Complex,
    Ghatsila

    Dear Sir,

    With reference to the above subject, Hindustan Copper            H
    568       SUPREME COURT REPORTS               [2014] 10 S.C.R.


A         Limited is please to issue work order to continuation with
          LOI dated 03-03-2007 to re-commission, operate and
          maintain Surda Mine and Mosaboni concentrator plant to
          supply and deliver copper concentrate at rates Rs
          1,53,470.00 per ton of mental in concentrate (Excluding
B         Royality) to Maubhandar work of Indian Copper Complex,
          produced from the operations of these units.

          This Work shall be governed by the terms and conditions
          of the Expressions of Interest of dated 21-09-2006, Notice
          Inviting Tender No. HC/HO/GM (M&S)/SUDRA dated 11-
c         12-2006 and the other agreed during subsequent
          discussions/negotiations, and the final offer."

                                                  (Emphasis given)

0      17. In the course of hearing, Mr. P.P. Rao, learned senior
  counsel appearing for the respondent produced before us a
  xerox copy of the Work Order dated 14.4.2007. Clause 4.9.1
  quoted hereinabove specifically mentions therein that the rate
  quoted by the appellant was inclusive of sales tax, service tax
E and the other taxes. The representative of the appellant signed
  the Work Order on each pages (20 pages) and acknowledged
  and admitted the terms and conditions for the said work.

         18. From the facts mentioned hereinabove, it is evident that
    the appellant has accepted the liability of payment of excise
F   duty, sales tax, service tax and other taxes and hence it cannot
    be held that the clause 4.9.1 of the Work Order is inconsistent
    with the terms and conditions of contract documents.

       19. The learned Arbitrator has gone in detail of the dispute
G raised by the appellant and rightly came to the conclusion that
  the responsibility on the appellant is to abide by the terms and
  conditions of the Work Order.

          20. We have also gone through the order passed by the
    High Court. The Court rightly came to the conclusion that there
H
SWAN GOLD MINING LTD. v. HINDUSTAN COPPER 569
           LTD. [M.Y. EQBAL, J.]
is no patent illegality in the Award passed by the Arbitrator       A
which needs interference under Section 34 of the Act.

      21. Mr. Sharan, learned senior counsel appearing for the
appellant, also challenged the arbitral award on the ground that
the same is in conflict with the public policy of India. We do not
                                                                     8
find any substance in the said submission. This Court, in the
case of Oil and Natural Gas Corporation Ltd. (supra), observed
that the term 'public policy of India' is required to be interpreted
in the context of jurisdiction of the Court where the validity of
award is challenged before it becomes final and executable. C
The Court held that an award can be set aside if it is contrary
to fundamental policy of Indian law or the interest of India, or if
there is patent illegality. In our view, the said decision will not
in any way come into rescue of the appellant. As noticed above,
the parties have entered into concluded contract, agreeing
terms and conditions of the said contract, which was finally D
acted upon. In such a case, the parties to the said contract
cannot back out and challenge the award on the ground that
the same is against the public policy. Even assuming the ground
available to the appellant, the award cannot be set aside as
because it is not contrary to fundamental policy of Indian law E
or against the interest of India or on the ground of patent
illegality.

     22. The words "public policy'' or "opposed to public policy",
find reference in Section 23 of the Contract Act and also F
Section 34 (2)(b)(ii) of the Arbitration and Conciliation Act,
1996. As stated above, the interpretation of the contract is
matter of the Arbitrator, who is a Judge, chosen by the parties
to determine and decide the dispute. The Court is precluded
from re-appreciating the evidence and to arrive at different G
conclusion by holding that the arbitral award is against the public
policy.

     23. We have given our anxious consideration in the matter.
In our view the High Court has rightly came to the conclusion
                                                                    H
    570      SUPREME COURT REPORTS              [2014] 10 S.C.R.


A   that no ground exists for setting aside the award as
    contemplated under Section 34 of the Act.

         24. For the reasons aforesaid, we do not find any merit in
    this appeal, which accordingly stands dismissed with no order
    as to costs.
8
    Rajendra Prasad                               Appeal dismissed.