S. Rajeswaran, J.
1. This Original Petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called 'the Act') to set aside the award dated 27.2.2001 passed by the arbitrators/respondents 2 to 4 insofar as in allowing the claim of the 1st respondent.
2. In 1994 the petitioner Port Trust decided to hire a Tug in order to supplement the requirement of the Trust's fleet to assist the ships manoeuvring in the port. The hiring was for a period of 1 year and a tender was floated inviting offers.
3. The 1st respondent participated in the tender and their offer was accepted and a contract was entered into between the petitioner and the 1st respondent.
4. The Tug Rishabh belonging to the 1st respondent was pressed into service pursuant to the above contract which came into force on 11.11.1994. The contract was valid until 9.11.95, but the contract was extended by a period of 6 months from 10.11.95 to 9.5.96 and it was not extended thereafter.
5. The 1st respondent invoked arbitration clause and made claims under 3 heads, i.e., 1) damages arising on account of wrongful termination; 2) amount deducted on "down time" basis by the Port Trust, the petitioner herein and 3) cost of repairs to the tug done and to be done.
6. Respondents 2 to 4 passed an award on 27.2.2001 in which the 1st claim for damages on account of wrongful termination was disallowed. The 2nd claim was allowed and a sum of Rs. 18,72,875/- being the amount deducted by the petitioner is directed to be paid with 18% interest from the date of claim. Insofar as the 3rd claim is concerned, a sum of Rs. 14,00,182/- is directed to be paid for the expenses already incurred by the 1st respondent for repairs already carried out with 18% interest from the date of the claim and another sum of Rs. 25 lakhs is directed to be paid for the cost of repairs to be carried out with 18% interest from the date of the award.
7. Aggrieved by the above said award, dated 27.2.2001 the above O.P. has been filed under Section 34 of the Act, 1996.
8. The following grounds have been raised by the petitioner:
1) The entire dispute raised by the 1st respondent is not arbitrable as per condition 11 of the General Conditions of the Contract (GCC).
2) awarding a sum of Rs. 18,72,875/- is contrary to Clause 1(P) of the agreement dated 9.1.1995 agreed, between, the parties.
3) Insofar as awarding a sum of Rs. 14,00,182/- for the repairs already carried out and another sum of Rs. 25 lakhs, for the repairs to be carried out is contrary to Clause 11 of the agreement dated 9.1.95.
9. Heard Mr. AL. Somayaji, the learned Senior Counsel for the petitioner and Mr. Sriram Panchu, the learned Senior Counsel for the 1st respondent. I have also gone through the documents filed and the judgments referred to by them in support of their submissions.
10. The learned Senior Counsel for the petitioner strenuously contended that the entire claim before the arbitrator is not arbitrable in view of condition No. 11 of GCC and this fact was specifically raised in para 2 of the additional counter-statement filed by the petitioner. The Arbitral Tribunal has not at all dealt with this contention of the petitioner. The learned Senior Counsel further drew my attention to Clause 1(P)and Clause 2 of the agreement dated 19.1.1995 and submitted that in view of Clause 1(P) if the Tug is absent from duty for any reason whatsoever for a period longer than 7 days it will result in loss of hire on pro-rata basis. He further referred to Clause 2 of the agreement and submitted that this clause would prohibit claiming any compensation being paid for the liability arising out of Act of God and all other damages and accidents.
11. The learned Senior Counsel laid emphasis on the letter dated 8.4.1996 wherein the 1st respondent has admitted that the recovery made by the Port Trust is contractually valid. The learned Senior Counsel has referred to the letter dated 19.10.95 and 2.2.96 wherein the 1st respondent admitted that the damages caused to the Tug are due to Act of God. If that be so, the 1st respondent is estopped from claiming any amount and the arbitral tribunal erred in law in granting the above said award which is contrary to provisions contained in the agreement.
12. In support of his submissions, the learned Senior Counsel relied on the following decisions:
2) 2003(1) RAJ 52 (Mad.) (Union of India v. Ramnath International Construction Pvt. Ltd.)
3) (Oil and Natural Gas Corpn. Ltd. v. SAW Pipes
Ltd.) : 2003(2) RAJ 1 S.C. (This was relied on by the learned Senior Counsel for the 1st respondent also)
13. Per contra, the learned Senior counsel for the 1st respondent submitted that the question of arbitrability cannot be raised by the petitioner before this Court having failed to take out a separate petition under Section 19 of the Act, 1996 before the arbitral tribunal itself. He further submitted that Clause 1(P) and Clause 2 of the agreement were duly considered by the arbitrators and only thereafter that too, on the basis of the evidence let in before the arbitral tribunal, the award has been passed and the same need not be interfered with under Section 34 of the Act, 1996. Further no grounds as mentioned under Section 34 of the Act, 1996 are attracted in this case warranting interference by this Court.
14. The learned Senior Counsel for the 1st respondent relied on the following decisions in support of his submissions:
1) 1999(2) RAJ 520 (S.C.) (Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan)
2) 2001 (1) RAJ 204 (S.C.) (T.P. George v. State of Kerala)
3) 2004(1) RAJ 165 (Bom.) (Municipal Corporation of Greater Mumbai v. Jyoti Construction Company)
4) 2004(4) RAJ 105 (All.) (A. and A. Restaurant and Hotel Pvt. Ltd. v. Dwarikajeet Restaurant Pvt. Ltd.)
5) 2005(2) RAJ 685 (Del.) (Union of India v. Bakshi Steel Limited)
15. First let me consider the decisions relied on by the learned Senior Counsel for either side.
16. In AIR 2002 S.C. 258 (cited supra), the Hon'ble Supreme Court reduced the rate of interest from 18% to 15% and relying on the reduction in the interest rate the learned Senior counsel for the petitioner submitted that awarding interest at 18% by the arbitrators is highly excessive, even assuming the award is sustainable.
17. In 2003(1)RAJ 52 (Mad.) (cited supra), a Division Bench of this Court held that the arbitrator could not act arbitrarily, irrationally, capriciously or independently of the contract and a deliberate departure or conscious disregard of the contract not only manifests the disregard of his authority or misconduct on his part but it may tantamount to malafide action. This court further held that if the relevant clauses in the contract are ignored by the arbitrator, then he has travelled beyond his jurisdiction.
18. In AIR 2003 S.C. 2629 (cited supra), the Hon'ble Supreme Court held that if the award is contrary to substantive provisions of law or the provisions of the Act or against the terms of the contract, it would be patently illegal, which could be interfered with under Section 34 of the Act, 1996. The Hon'ble Supreme Court further observed in the above decision as under:
40. It cannot be disputed that for construction of the contract, it is settled law that the intention of the parties is to be gathered from the words used in the agreement. If words are unambiguous and are used after full understanding of their meaning by experts, it would be difficult to gather their intention different from the language used in the agreement. If upon a reading of the document as a whole, it can fairly be deduced from the words actually used therein that the parties had agreed on a particular term, there is nothing in law which prevents them from setting up that term. Re: Modi and Co. v. Union of India . Further in
construing a contract, the Court must look at the words used in the contract unless they are such that one may suspect that they do not convey the intention correctly. If the words are clear, there is very little the Court can do about it. Re: Provash Chandra Dalui and Anr. v. Biswanath Banerjee and Anr. 1989 Supp (1) SCC 486.
41. Therefore, when parties have expressly agreed that recovery from the contractor for breach of the contract is pre-estimated genuine liquidated damages and is not by way of penalty duly agreed by the parties, there was no justifiable reason for the arbitral tribunal to arrive at a conclusion that still the purchaser should prove loss suffered by it because of delay in supply of goods.
42. Further, in arbitration proceedings, the arbitral tribunal, is required to decide the dispute in accordance with the terms of the contract....
56. In the facts of the case, it cannot be disputed that if contractual term, as it is, is to be taken into consideration, the award is, on the face of it, erroneous and in violation of the terms of the contract and thereby it violates Section 28(3) of the Act. Undisputedly, reference to the arbitral tribunal was not with regard to interpretation of question of law. It was only a general reference with regard to claim of respondent. Hence, if the... award, is erroneous on the basis of record with regard to proposition of law or its application, the Court will have jurisdiction to interfere with the same.
19. In 1999(2) RAJ 520 (3.C.) (cited supra), the Hon'ble Supreme Court did not deem it necessary to decide the question of time limits set in arbitration Clauses 2 and 3 of Section 16 are mandatory or not in view of the specific facts contained thereon. But the Hon'ble Supreme Court proceeded to decide the question of jurisdiction on the assumption that the appellant is not precluded from raising this question at the stage of Section 34, though these issues have not been raised before the arbitrator as per Sub-Clauses 2 and 3 of Section 16.
20. In 2001(1) RAJ 204 (S.C.) (cited supra), the Hon'ble Supreme Court held that High Court cannot substitute its views for those of the arbitrator and on facts if the view taken by the arbitrators cannot be said to be unreasonable or one which cannot be arrived at by a reasonable person, the award cannot be set aside by the High Court.
21. In 2004(1) RAJ 165 (Bom.) (cited supra), the Bombay High Court held as follows:
9. The Arbitration and Conciliation Act, 1996 was enacted with a specific Parliamentary objective of minimizing the supervisory role of Courts in the arbitral process. The statement of Objects and Reasons accompanying the Bill that was introduced in Parliament expressly refers to this as an object underlying the enactment. Section 5 of the Act expounds upon that theme by providing that no judicial authority shall in matters governing by Part I, intervene except where it is so provided in the Part Section 34(2) provides that an arbitral award may be set aside by the Court only if one of the grounds set out in Clause (a) or (b) thereto is established.
10. The scope of the provision for challenge to an arbitral award on the ground that the award is in breach of public policy came up for consideration before a Division Bench of this Court in Vijaya Bank v. Maker Development Services Pvt. Ltd. 2001(3) Bom. CR 652, Mr. Justice B.N. Srikrishna, (as the learned Judge then was) speaking for the Division Bench, noted the Statement of Objects and Reasons appended to the Bill introduced in Parliament, and the provisions of Sections 4 and 5, and held that the avowed object of Parliament was to curtail judicial intervention in the arbitral process. The Division Bench held that the "1996 Act is intended to reduce to the barest minimum the legal challenge to arbitral awards". This Court held that the use of the non obstante clause in Section 5 and the embargo on judicial intervention except as provided and the repeated use of the word "only" in Section 34 puts the matter beyond cavil. This Court held that its view found support in two judgments of the Supreme Court viz., Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan and Ors. , where the Supreme Court held that the scope for a challenge to an award under the Act of 19% is considerably less than under the Arbitration Act of 1940 and in Konkan Railway Corporation Ltd. v. Mehul Construction Co. 2001(1) Bom.CR 771: 2000(3) R.A.J. 1, where the Supreme Court held that the 1996 Act had limited the intervention of the Court with the arbitral process to the minimum and that in interpreting the provisions of the Act, it was not open to the Court to ignore the object and purpose of the enactment. Before the Division Bench of this Court in the Vijaya Bank case (supra), reliance was placed on the judgment of the Supreme Court in Renusagar Power Co. Ltd. v. General Electric Co. , and on the basis of the observations of the
Supreme Court therein, it was urged that the expression "Public policy" has a wider meaning in the context of a domestic award as distinguished from a foreign award. This Court held that irrespective of whether the expression "public policy" has to be given a wider or restricted meaning, it cannot carry the meaning of a contravention of law simplicitor. However, one thing which does emerge from the judgment of the Division Bench is a categoric finding that whatever be the width of the expression "public policy", it does not include a mere contravention of law.
11. The binding principle that therefore emerges from the decisions of the Supreme Court and of this Court is that the approach of the Court, when confronted with a challenge to an arbitral award under Section 34, has to reflect a consciousness of the legislative intent enacting the Arbitration and Conciliation Act, 1996 which was to restrict and curtail the extent of judicial intervention in arbitral proceedings and award. Moreover, even though the expression "public policy" is recognised judicially as being an "elusive concept", difficult to define and capable of interpretation both in narrow as well as in broad terms, that would not be warrant for the Court to extend judicial intervention in arbitral awards beyond the restricted sphere envisioned by Parliament.
12. From the judgments of the Supreme Court which deal with the content of the expression "public policy" it emerges that public policy is a concept which relates to the public good and to public interest. In Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguli the Supreme Court while
striking down a hire and fire clause contained in employment contracts of a public sector corporation held that the concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or, public interest has varied from time to time in Renusagar (supra) Chief Justice Venkatachaliah, speaking for a Bench of three learned Judges of the Supreme Court noted that the doctrine of public policy is somewhat open-textured and flexible and has comprehended a narrow view and a broad view. The narrow view is that Courts cannot create new heads of policy, while the broader view which has been accepted in later decisions of the Supreme Court is that heads are not necessarily closed for judicial interpretation. The judgment of the Supreme Court adverted to the fact that in England, the ground of public policy is capable of being invoked where the enforcement of an award "would affront some moral principle the maintenance of which admits no possible compromise", such as (i) Where the fundamental conceptions of English justice are disregarded; (ii)Where English conceptions of morality are infringed; (iii) Where a transaction prejudices the interest of a nation or its good relations with foreign powers; (iv) where the foreign law or status offends English conception of human liberty and freedom of action. The judgment of the Supreme Court in Renusagar's case (supra), as noted earlier has been considered in Vijaya Bank's case (supra), by B.N. Srikrishna, J., and it would, therefore, not be necessary to pursue that aspect of the matter any further. It would however, be in the fitness of things to refer to the judgment of a Bench of two learned Judges of the Supreme Court in Smita Conductors Ltd. v. Euro Alloys Ltd. 2001(7) SCC 728 : 2001(3)R.A.J. 188 Wherein the context of the enforcement of a foreign award under the Foreign Awards (Recognition and Enforcement) Act, 1961, the Supreme Court held that the expression "public policy of India" would mean that a foreign award cannot be recognized or enforced if it is contrary to (i) the fundamental policy of Indian Law; (ii) the interests of India; (iii) justice or morality.
13. These decisions, though they have been rendered in the context of the enforcement of a foreign arbitral award, are in my view, of relevance in laying down for this Court the approach to a challenge to an arbitral award on the ground it is in conflict with public policy. Conscious as the Court must be of the varying content of the doctrine of public policy, it would be appropriate to regard a breach of public policy as involving a conflict with something so fundamental so as to constitute or lie at the root of a legal principles in India. Similarly, something which is go unconscionable so as to contrary to fundamental notions justice or morality may well be regarded as a breach of public policy. However, in searching for an answer to the question as to whether there has been a breach of the concept of justice or morality, it would not be permissible for the judge considering a challenge to an arbitral award to re-appreciate the reasons underlying an arbitral award or for that matter to re-appreciate the oral or documentary evidence on the record before the Arbitrator. In other words, a conception of justice or morality which the judge regards as fundamental to the law cannot be a warrant for opening up the flood gates for the factual evaluation of an arbitral award. Indeed', as the judgment of the Division Bench lays down in the Vijaya Bank case (supra), even an error of law is not by itself or simpliciter a breach of public policy. Therefore, in considering the formulation which has been sought to be urged on behalf of the petitioner, I am of the view that an investigation into whether an arbitral award offends against public policy cannot be in the broad terms in which it has been stated on behalf of the petitioner. The Court for instance would not be justified in interfering with an arbitral award merely because in a given case, the interpretation which is sought to be placed on the terms of the contract by the Arbitrator does not accord with the interpretation which the Court, if it were to conduct an adjudication in the first instance, would have placed or, for that matter, because the view which has been taken by the Arbitrator either on law or on fact does not accord with the view of the Judge before whom a challenge is made under Section 34. So long as the Arbitrator has acted within jurisdiction in interpreting the provisions of the contract, and has applied the law to his evaluation of the facts, the Court must rest with the decision of the Arbitrator unless the Court is satisfied that the arbitral award is in conflict with the public policy of India. Breach of public policy is indeed a test of a high, order. In that context, the challenge in the present case to the arbitral award can be considered.
22. In the above decision, the Bombay High Court held that it would be - impermissible for the High Court, having regard particularly to the limited parameters to the jurisdiction under Section 34 to find fault with the approach of the arbitrator in assessing the dispute before him. It was further held that the approach of the court when confronted with the challenge to an arbitral award under Section 34 has to reflect a consciousness of the legislative intent in enacting Act, 1996 which was to restrict and to curtail the extent of judicial intervention in arbitral proceedings and award. So long as the arbitrator has acted within jurisdiction in interfering with the provisions of the contract and has applied the law to his evaluation of the fact, the court must rest with the decision of the arbitrator unless the court is satisfied that the arbitral award is in conflict with public policy of India and breach of public policy is indeed a test of a high order.
23. In 2004(4) RAJ 105 (All.) (cited supra), the Allahabad High Court held that the parties under the Act, 1996 challenge an arbitral award except on the grounds as laid down under Section 34(2) of the Act and the intention of the legislature is clear to restrict power of court in such arbitral matters and the object of the Act is to attribute finality to an arbitral award except under certain and recognised matters.
24. In 2005(2) RAJ 685 (Delhi) (cited supra), the Delhi High Court held that it is a settled principle of law that the court while dealing with the petition under Section 34 of the Act would not sit as a court of appeal over the finding of facts recorded in the award as the arbitrator is the final judge of the facts.
25. In the light of the above legal principles evolved from the decisions cited by the learned Senior Counsel on either side, let me consider the facts of the present case.
26. It is not in dispute that the 1st claim before the arbitral tribunal is for a sum of Rs. 1,25,41,976/- being the damages for wrongful repudiation of charter agreement by the petitioner Port Trust. In additional counter statement the petitioner herein has specifically pleaded in para 2 that the non-renewal of the contract cannot be a subject matter of an arbitration Clause 11(ii) of GCC. Clause 11(it) specifically excludes arbitration in respect of acts which are done by the Port Trust in terms of the contract and where such acts, and decisions are at the discretion of the Port Trus. As such, it was pleaded by the petitioner in the additional counter that the non-renewal of the contract cannot be made arbitrable.
27. Even though the arbitrability of the 1st claim was not gone into by the arbitrators, the arbitral tribunal rejected the 1st claim in toto and against which no petition was filed by the 1st respondent and thus the rejection of the 1st claim has attained its finality. Therefore I am not going into the question of arbitrability of the 1st claim, namely, the claim for damages for wrongful repudiation of the agreement by the petitioner/Port Trust.
28. The 2nd claim by the 1st respondent is for a sum of Rs. 18,72 ,87 5/- being the hire charges wrongfully deducted or as indemnity for propeller fouling of the Tug due to the uncleanliness of the port waters which the Port Trust is bound to keep clean. This claim was allowed by the arbitral tribunal.
29. The learned Senior Counsel for the petitioner vehemently contended that directing the petitioner to pay the hire charges deducted by them is contrary to the terms of the agreement namely, Clause 1(P) of the agreement dated 9.1.1995 according to which if the tug is out of operation for any reason whatsoever for a period longer than 7 days, it will result in loss of hire on pro-rata basis.
30. For better appreciation, Clause 1(P) is extracted below:
P) In the event that the said Tug is out of operation for any reason whatsoever for a period longer than seven (7) days then the contractor shall provide the Board with a Tug just as suitable for the said period. The absence of the said Tug from duty for any period will result in loss of hire on pro-rata basis. If the contractor is unable to provide a replacement tug, as stated above, the Port may provide a suitable tug, the mobilisation charges for which shall be borne by the contractor to the extent of the mobilisation charges claimed by the contractor
31. In the above clause the words used is "for any reason whatsoever" and therefore according to the learned Senior Counsel for the petitioner the hire charges have been rightly deducted for the absence of the Tug which fact was admitted by the 1st respondent in their letter dated 8.4.1996.
32. In the letter dated 8.4.1996 the 1st respondent has stated that the recoveries made by the petitioner port trust, though contractually valid, warrant reconsideration as the same was not due to any fault of the contractor.
33. I find force in the submission of the learned Senior Counsel for the petitioner, A plain reading of Clause 1(P) makes it very clear that if the Tug is absent for a period longer than 7 days, it would result in loss of hire on pro-rate basis. That is why the 1st respondent themselves have clearly stated that the deduction of hire charges is contractually valid in their letter dated 8.4.1996.
34. The arbitral tribunal admits in para 10 of the award that there can be no dispute that Clause 1(P) of the agreement is very widely worded clause. The tribunal has also referred to the letter dated 8.4.1996 in which the 1st respondent accepted that the recovery is contractually valid. But still it went on to award that claim on the basis that the Port Trust has failed to take positive and effective steps to ensure that the Harbour waters are kept clean for safe operation. When the Port Trust failed to discharge the sea water clean", it was due to its own negligence and due to this negligence damages occur to the propeller resulting in down-time. Therefore the Port Trust has committed breach of its duty, it cannot take advantage of its own breach and claim that it should be entitled to claim hire charges.
35. I am of the considered view that the arbitrators have acted beyond their jurisdiction in interpreting clause 1(P) of the agreement and gone out of their way to award the claim. The language of the Clause, i.e., 1(P) is unambiguous, clear and simple that "for any reason whatsoever" if the Tug is out of operation for a period longer than 7 days, it will result in loss of hire on prorata basis. The 1st respondent was also aware of this widely worded clause as they were a party to the agreement and that is why in their letter dated 8.4.1996 they conceded that the recovery made by the Port Trust though contractually valid (emphasis supplied) warrant reconsideration as the same was not due to any fault of them. Their request itself in the letter dated 8.4.1996 is that to consider their case sympathetically even though it is barred by the contract. In such, circumstances, the discretion is vested with the Port Trust to consider the request favourably or not. When the request was turned down by the Port Trust, it amounts to a decision taken by the Port Trust which is final, conclusive and binding on all the parties of the contract as rightly submitted by the learned Senior Counsel for the petitioner. This decision of the Port Trust is not arbitrable as per Clause 11 of the GCC.
36. But the learned Senior Counsel for the 1st respondent submitted that the arbitrability of the claims and the jurisdiction of the arbitral tribunal are questions which should be raised under Section 16(2) and (3) of the Act, 1996 and having not raised the same the petitioner cannot be allowed to raise the question of arbitrability before this Court.
37. I am unable to accept this contention of the learned Senior Counsel for the 1st respondent. The question of arbitrability was raised by the petitioner herein in their additional counter statement filed before the arbitral tribunal. Further under Section 34(2)(a)(iv) of the Act, 1996 an arbitral award may be set aside by the court if the party making the application furnishes proof that the arbitral award deals with the dispute not contemplated by or not falling within the terms of the submissions to arbitration, nor it contains decisions on matters beyond the scope of the submissions to arbitration.
38. This question of objecting to the jurisdiction of the arbitrator under Section 16(2) and (3) of the Act, 1996 came up before the Hon'ble Supreme Court in Olympus Superstructures (P) Ltd. case (cited supra), but the Hon'ble Supreme Court did not think it necessary to decide this question in view of the particular facts of that case. Moreover in the case on hand the question of arbitrability was already raised by the 1st respondent before the arbitral tribunal and therefore they can very well raise this question before this Court.
39. Insofar as the 3rd claim is concerned, the 1st respondent prayed for an award of a sum of Rs. 1,27,00,000/-for expenses incurred/to be incurred for carrying out the repairs to the Tug and the arbitral tribunal granted a sum of Rs. 14,00,182/- on account of expenses already incurred and another sum of Rs. 25 lakhs on account of the cost of repairs to be carried by the 1st respondent.
40. The learned Senior Counsel for the petitioner vehemently contended that this award of granting a total sum of Rs. 39,00,182/- towards the cost already incurred and to be incurred in carrying out the repairs to Tug is absolutely contrary to the Clause 2 of the agreement entered into between the parties on 9.1.1995.
41. Clause 2 of the agreement is extracted below for better appreciation:
2. The Board and the Contractor hereto hereby mutually exempt each other from all liability arising from the act of God, civil war, civil commotion, riots and all other damages and accidents of the seas and navigations
42. A mere reading of this clause would make it clear that both the parties mutually exempt each other from all liabilities arising from the act of God etc., and all other damages and accidents of the seas and navigations. That being so, the 3rd claim of the 1st respondent before the arbitral tribunal for the expenses incurred and to be incurred for carrying out the repairs to the Tug is clearly inadmissible and contrary to Clause 2 of the agreement. In fact, the 1st respondent themselves by their letter dated 19.10.1995 and 2.2.96 wrote to the petitioner that the problems encountered by the tug is an act of God. In such circumstances, the 1st respondent is not entitled to any claim for the damages caused to the Tug.
43. The arbitral tribunal even though referred to the Clause 2 of the agreement went on to hold that the tug suffered damages due to the negligence of the petitioner herein which is not in accordance with the explicit terms of the contract.
44. When the question of damages for the repairs suffered by the Tug does not arise at all as per the terms of the contract, as rightly, pointed out by the learned Senior Counsel for the petitioner this claim is not arbitrable. The objections raised by the learned Senior Counsel for the 1st respondent for raising this question of arbitrability for the first time is rejected for the reasons already given by me while considering the 2nd claim for returning the hire charges deducted by the petitioner.
45. The arbitrator could not arbitrate independently of the contract and deliberate departure or a conscious disregard of the contract not only manifests the disregard of his authority or misconduct on his part but it may tantamount to malafide action as held by the Hon'ble Supreme Court in (Rajasthan State Mines and Minerals Ltd. v. Eastern Engineering Enterprises), which decision was followed by the Division Bench of this Court in Ramnath International Construction Pvt. Ltd. (cited supra) to come to a decision that an award is liable to be set aside if it is passed by the arbitrator which is against the stipulations and prohibitions contained in the contract between the parties. This decision will squarely apply to the facts of the present case as the impugned award has been passed contrary to clauses contained in the agreement. These clauses extracted by me already are absolutely clear and unambiguous, which were also admitted by the 1st respondent in their letters. In such circumstances, there is no question of interpretation of these clauses and the arbitrator has travelled beyond his jurisdiction. Hence the entire award is liable to be set aside.
46. It is true that Act 1996 was enacted with a specific objective of minimising the supervisory role of the court in the arbitral process. But that does not mean that an award passed by the arbitral tribunal cannot be set aside if the same is passed against the terms of the contract. The Hon'ble Supreme Court in ONGC v. Saw Pipes case (cited supra) has categorically held that the court can set aside the arbitral award under Section 34(2) of the Act, 1996 if the party making the application furnishes proof that the arbitral award deals with the dispute not contemplated by or not falling within the terms of the submission to arbitration or it contains decisions of matters beyond the scope of the submission to arbitration. The Hon'ble Supreme Court further held that the court may set aside the award if the award passed by the arbitral tribunal is against the terms of the contract.
47. As already observed by me the award under challenge has been passed against the terms of the contract and the arbitral tribunal has also considered the claims of the 1st respondent which are not arbitrable as per the conditions of the contract. In such circumstances. I have no hesitation in interfering with the award under challenge and the award dated 27.2.2001 passed by respondents 2 to 4 is set aside.
48. Consequently, the O.P. is allowed. No costs.