PETITIONER:
STATE OF ORISSA & ORS.
Vs.
RESPONDENT:
LALL BROTHERS
DATE OF JUDGMENT25/08/1988
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
RANGNATHAN, S.
CITATION:
1988 AIR 2018 1988 SCR Supl. (2) 579
1988 SCC (4) 153 JT 1988 (3) 552
1988 SCALE (2)542
CITATOR INFO :
RF 1989 SC 606 (7)
ACT:
Arbitration Act 1940: Sections 14, 17, 30 and 33-
Unreasoned award-No ground to set aside award-Lump sum
award-Not bad perse.
HEADNOTE:
The respondent-firm was entrusted with the construction
work of a `Minor Irrigation Project' by the State of Orissa-
Petitioner. The work was due to be completed on 3rd August,
1977 but it was actually on 31st March? 1978. Disputes
arose in regard to the payment for the work. The respondent-
contractor raised certain claims and gave notice for the
appointment of an arbitrator according to the contract. On
22nd April, 1980, the Chief Engineer appointed an arbitrator
but, on an application by the respondent, the judge removed
him and appointed another arbitrator.
Before the arbitrator, the respondent filed its claim
along with some documents and the petitioner filed its
counter statement. No further evidence was adduced and on
23rd June, 1982. the arbitrator gave a lump sum award for
Rs. 14.67 lakhs with interest at 9% from 30th April, 1978.
On 11th July 1983, the Sub-Judge made the award rule of
the Court with the modification that the interest was
directed to run from 23rd June, 1982, instead of 30the
April, 1978.
The High Court allowed the appeal in part and deleted
the direction regarding future interest awarded by the
arbitrator and modified by the Subordinate Judge.
In the appeal by special leave to this Court. it waS
contended on behalf of the State-petitioner that the award
in the instant case was an unreasoned award and a lump such
amount was awarded without specifying the amount awarded on
particular grounds.
Dismissing the special leave petition .
PG NO 579
PG NO 580
HELD: 1. The fact that there is an unreasoned award, is
no ground to set aside an award. Lump sum award is not bad
per se, as such. [583A]
In the instant case, the award contained the recitals to
the effect that the arbitrator had gone through the claim
statement, counterstatement and documents produced before
him and heard the representations made by the parties. There
is no error of law apparent on the face of the award. There
was no misconduct on the part of the arbitrator or in the
conduct of the proceedings. [582G]
Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills
Ltd., Indore, [1967] 1 SCR 105; Union of India v. Bungo
Steel Furniture Pvt. Ltd., [1967] 1 SCR 324 and Allen Berry
JUDGMENT:
282, referred to.
2. An award is conclusjve as a judgment between the
parties and the court is entitled to set aside an award only
if the arbitrator has misconducted himself, or where an
award has been inproperly procured, or is otherwise invalid
under Sections 30 and 35 of the Arbitration Act 1940. [583B]
3. An award may be set aside by the Court on the ground
of error on the face of the award, but an award is not
invalid merely because by a process of inference and
argument it may be demonstrated that the arbitrator has
committed some mistake in arriving at his conclusion [583C]
4. It is not open to the Court to speculate, where no
reasons are given by the arbitrator, its to what impelled
him to arrive at his conclusions. [593D]
Champsey Bhara & Co. V. Jivraj Balloo Spinning &
weaving co. Ltd., L. R. 50 I.A. Jivarajbhai Ujamshi Sheth &
Ors. v. Chintamanrao Balaji & Ors. [1964] 5 SCR 480 referred
to.
5. If a question of law was not specifically referred
to the arbirator his decision is not final. [583F]
Continental Construction Co. Ltd. v. State of Madhya
Pradesh, [1988] 3 SCC 82 distinguished.
&
CIVIL APPELLATE JURISDICTION : Special Leave petition
(civil) No. 7396 of 1987.
PG NO 581
From the Judgment and Order dated 8.4. 1997 of the
Orissa High Court in M. A. No. 378 of 1983.
M.K. Banerjee, Solicitor General, R.K. Mehta and Miss
Mona Mehta for the Petitioners.
G.L. Sanghi, A.P. Jena and Vinoo Bhagat for the Respondent
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. This is an application for leave
to appeal under Article 136 of the Constitution from the
decision and judgment of the High Court of Orissa, dated 8th
April, 1987. By the judgment the High Court had allowed the
appeal in part and modified the award so far as it related
to the payment of interest in the awarded amount. Another
appeal challenging the validity of the award was, however,
dismissed.
In or about 1975-76 the respondent was entrusted with
the work of “Construction of balance work of earth dam of
Koska Minor Irrigation Project” vide an agreement No. 207 F-
2. The said work was due to be completed on 3rd August,
1977 but it was actually completed on 31st March, 1978. The
estimated of value of the work was Rs.25,06,299. It is
stated that the contractor, respondent herein, had executed
only 18 out of 33 items of work beside one extra item and he
was paid a sum of Rs.23.63.122 for the work done. According
to, the petitioner no further amount was due to, the
contractor, the respondent.
Final bill was prepared on 12th February, 1980 and it
was unconditionally accepted be the respondent-
contractor. This contention, however, was sought to be
disputed before us by the respondent contractor by producing
certain bill stated to be the final bill which was `accepted
under protest ‘. It is, however, not necessary for us to go
into this question at this stage.
On or about 16th April, 1980, the respondent-contractor
raised certain claims and gave notice far appointment of an
arbitrator according to the contract. On 22nd April, 1980,
the Chief Engineer appointed Shri N.K. Mishra as arbitrator.
However. on the application of the respondent the
subordinate Judge removed Shri N.K. Mishra and instead
appointed Shri P.C. De as the arbitrator. Before the
arbitrator the respondent filed its claim along with some
documents and the petitioner filed his counter statement. It
is stated on behalf of the State that no further evidence
PG NO 582
was adduced by the respondent but the petitioner produced
the measurement books. The petitioner contended that no
amount was due. The respondent disputed that.
The arbitrator on behalf of the claim statement and some
document filed by the respondent-contractor, gave a lump sum
award for Rs. 14,67,000 plus interest at 9% from 30.4. 1978.
The award was given on 23rd June, 1982. On 11th July, 1983,
the learned Subordinate judge made the award rule of the
Court with the modification that the interest was directed
to run from 23.6.1982 instead of 30.4. 1978. The High Court
allowed the appeal in part and deleted the direction
regarding future interest awarded by the arbitrator and
modified by the learned Subordinate Judge. In appeal it was
contended before the High Court for the said judgment by the
Subordinate Judge that the following objections were taken
against the award, namely:
“(i) that there is an error of law apparent on the face
of the award ;
(ii) that the arbitrator has misconducted himself by
giving a lump sure award without examining, each item of the
claims,
(iii) that the claimant having accepted the final bill
unconditionally deposit, the contract between the parties
stood closed and, therefore, the arbitration clause was not
operative and the arbitrator appointed had no jurisdiction
to adjudicated upon the disputes ;
(iv) that the award of interest is without jurisdiction”.
Except the documents on record, neither of the parties
adduced any evidence. It was urged before us that the High
Court did not accept challenge to the award but modified the
order of interest as indicated before. The award in question
contained the recitals to the effect that the arbitrator had
gone through the claim statement, counter statement and
documents produced before him and heard the representations
made by the parties. There is no error of law apparent on
the face of the award. There was no misconduct an the part
of the arbitrator or in the conduct of the proceedings. It
was contended before us that this is an award which was an
unreasoned and a lump of amount was awarded without
specifying the amount awarded on particular grounds.
PG NO 583
In our opinion, the High Court was right in refusing to
accept the challenge to the award. The fact that there is an
unreasoned award, is no ground to set aside an award. Lump
sum award is not bad per se. as such. An award is conclusive
as a judgment between the parties and the court is entitled
to set aside an award only if the arbitrator has
misconducted himself in the proceedings or when the award
has been made after the issue of an order by the Court
superseding the arbitration or after arbitration proceedings
have become invalid under section 35 of the Arbitration Act
or where an award has been improperly procured or is
otherwise invalid under section 30 of the Act. An award may
be set aside by the Court on the ground of error on the face
of the award, but an award is not invalid merely because by
a process of inference and agrument it may be demonstrated
that the arbitrator has committed some mistake in arriving
at his conclusion.
It is not open to the Court to speculate, where no
reasons are given by the arbitrator, as to what impellied
him to arrive at his conclusions. See in this connection the
observations of the Judicial Committee in Champsey Bhara &
Co. v. Jivraj Balloo Spinning & Weaving Co. Ltd., L.R. 50
I.A. 324 and of this Court in Jilarajbhai Ujamshi Sheth &
Ors. v. Chintamanrao Balaji & Ors., [1964] 5 SCR 480.
The fact that a lump sum award has been given, is no
ground to declare the award bad. See further Firm Madanlal
Roshanlal Mahajan v. Hukumchand Mills Ltd. Indore, [1967] 1
SCR 105 and Union of India v. Bungo Steel Furniture Pvt.
Ltd., [1967] 1 SCR 324 as well as the decision of this Court
in Allen Berry & Co,. (P) Ltd. v. Union of India, New Delhi,
[1971] 3 SCR 282.
Learned Solicitor General for the petitioner relied on
Continental Construction Co. Ltd. v. State of Madhya
Pradesh, [1988] 3 SCC 82.Reliance was misplaced. If a
question of law was not specifically referred to the
arbitrator his decision is not final. It was reiterated that
the arbitrator is bound by law, and if an error of law in
the award is on the face of it, it is amenable to be
corrected.
In that view of the matter the points sought to be urged
in this application for leave, are not entertainable. The
application fails and is accordingly dismissed.
N.V.K. Petition dismissed.