JUDGMENT
S.S. Saron, J.
1. This revision petition has been filed by the petitioner Food Corporation of India, (“FCI” for short) through its District Manager, Ranika Bagh, Amritsar, against the order dated 11.1.1993 passed by the learned Addl. District Judge, Amritsar whereby the appeal against the order dated 23.11.1987 passed by the learned Sub Judge, 1st Class, Amritsar, had been dismissed.
2. Respondent Ram Lubhaya was a contractor of the petitioner-F.CI. in connection with the work relating to the loading, unloading and transportation of food grains and allied material. A written work contract agreement was entered into between the parties. Disputes arose amongst them relating to the work agreement. Respondent Ram Lubhaya, on account of the dispute having arisen submitted an application under Section 20 of the Arbitration Act 1940 (‘the Act’ for short). The matter was referred to arbitration by the Managing Director of the Food Corporation of India in terms of order dated 6.5.1981. Later vide order dated 17.5.1982, the earlier order was modified and the Managing Director of the Food Corporation of India was authorised to appoint any person to act as an arbitrator to go into the dispute between the parties. Shri
P.C. Rao, Additional Legal Advisor to Govt. of India, Ministry of Law and Justice was appointed as a Sole Arbitrator by the Managing Director of the Food Corporation of India. A copy of the order regarding appointment of an a arbitrator as made by the Managing Director of Food Corporation of India was endorsed to Ram Lubhaya-respondent.
3. The arbitration proceedings were taken up on 2.8.1982 and notice of the same was given to both the parties for 8.9.1982 and they were required to file their respective claims. The petitioner-F.CI. filed its claim on 5.1.1983 before the arbitrator. However, Ram Lubhaya-respondent could not be served in the proceedings. The registered cover sent to him for his appearance before the arbitrator on 5.1.1983 was received back with the report that he had refused service. In any case another opportunity was given and the proceedings were adjourned for 25.1.1983 for filing counter claim by Ram Lubhaya-respondent. The case was to be taken up on 5.2.1983 which was declared as a holiday. The case was then taken up on 7.2.1983 and was adjourned for 7.3.1983 for appearance of Ram Lubhaya-respondent before the arbitrator. The said date i.e. 7.3.1983 was again declared a holiday and the case was adjourned to 8.4.1983. The case was then adjourned to 19.5.1983. However, Ram Lubhaya respondent did not appear before the arbitrator. The evidence of the petitioner-F.CI. was then closed for the purpose of making the award. The petitioner-F.CI. was asked by the arbitrator to submit the requisite stamp papers and the case was adjourned to 25.5.1983 on which date the award was made by the arbitrator whereby Ram Lubhaya-respondent was ordered to pay a sum of Rs. 1,70,061.34 to the petitioner-F.CI.
4. Against the award dated 25.5.1983, the petitioner-F.CI. filed an application under Section 18 of the Act for making the award of the Arbitrator as a rule of the court. Ram Lubhaya-respondent appeared in Court and filed objections under Section 30, 33, 16 and 19 of the Act challenging the legality and validity of the award. In the objection petition filed by Ram Lubhaya-respondent, it was pleaded that no valid and legal notice of filing the award in the Court was served upon him, besides the “impugned award was an ex parte award and no pre-emptory notice of the proceedings against the objectors was served upon him. It was further pleaded that the application for making the impugned award as rule of the Court had not been filed by the competent person i.e. by the District Manager of the Food Corporation of India. Further objection was raised that it was not filed within the statutory period of four months of the appointment of the arbitrator and no extension was given to the arbitrator for giving his award. The impugned award in fact was passed after the expiry of the stipulated period of four months and the proceedings before the arbitrator were bad on that ground. It was also pleaded that the impugned award had not been recorded on requisite stamp papers. Moreover the arbitrator committed judicial misconduct in making the impugned award in as much as he imported his personal knowledge without appreciating the proposition of law with respect to risk and costs and penalty clause etc. The application filed by the petitioner-FCI for making the award as rule of the Court was dismissed by the Learned Sub Judge, 1st Class on 23.11. 1987. It was held that the award was not legally valid as no reasons in support of the award which was condition prescribed in terms of the Clause 19 of the Works Contract Agreement had been recorded. The petitioner-F.C.I. aggrieved against the order of the learned Sub Judge, 1st Class, preferred an appeal before the District Judge, Amritsar. The learned Addl. District Judge, Amritsar, to whom the appeal was assigned dismissed the same vide his impugned order dated 11.1.1993 which is assailed by the petitioner-F.C.I.
5. The petitioner-F.C.I. has submitted that the award passed by the arbitrator is a reasoned award and is based on the documentary evidence produced by the petitioner. It is submitted that the petitioner produced sufficient documentary evidence before the arbitrator to the effect that it suffered loss on account of negligent act of the respondent-contractor who absented himself from the contract, thereby putting the petitioner to a loss as the work had to be done at the risk and costs of the respondent strictly in accordance with the work contract agreement which was arrived at between the parties at the time when the contract was awarded to the respondent. A statement showing loss suffered by the petitioner was filed with the arbitrator which was self explanatory. Besides, the Courts below erred in holding that no evidence whatsoever had been produced by the petitioner. In fact documentary evidence was produced before the arbitrator in the shape of the various letters written to the respondent before resorting to the penal provisions of the contract agreement. The work was got done at the request and costs of the respondent only when all efforts of the petitioner failed to make the respondent to under take the work as per the contract agreement.
6. In response, learned Counsel appearing for the respondent has submitted that the orders passed by the Courts below are just and reasonable. Besides, there is a condition provided in the work contract agreement for recording reasons in support of the award by arbitrator. The arbitrator, therefore, it is contended, was required to record reasons in support of his award. The non recording of reasons, it is contended, vitiates the award passed by the arbitrator and the Courts below have rightly dismissed the application of the petitioner-FCI for making the award a rule of the Court. It is further contended that in fact the award was passed beyond the time limit fixed for passing the award without seeking extension of time. Reliance in this regard has been placed on the case; State of Punjab v. Hardyal . It is also contended that the scope of revisional jurisdiction of this Court under Section 115 of the Code of Civil Procedure (‘CPC for short) is limited and the impugned order passed by the Courts below are not liable to be set aside.
7. I have given my thoughtful consideration to the submissions made by the petitioner and the contention of learned Counsel for the respondent.
8. Ram Lubhaya-Respondent was given the contract for loading, unloading and transportation of good grains and allied material. In pursuance of the said contract the he carried out the work upto 30.8.1978. Thereafter, it is stated that he remained absent from 1.9.1978 to 7.10.1978. Again he remained absent from 12.2.1979 till the completion of the contract i.e. on 13.4.1980. The petitioner-F.C.I. alleged that the respondent was requested time and again to undertake work in terms of the Contract. However, the same was not carried out by him. The work was thereafter got done at the cost of Sh. Ram Lubhaya, (respondent), on account of which the petitioner-F.C.I. suffered a loss of Rs. 1,70,200.34. The said amount was claimed as recoverable from the respondent in terms of the work agreement. The petitioner-FCI placed on record various letters written by it to the respondent. A statement containing the details of the amount recoverable from the respondent-contractor was also filed by the F.C.I. No evidence was led by the parties and the arbitrator mainly relied on the claim as made by the petitioner-FCI, which was accompanied by the statement that it had suffered the losses. The said statement was also not proved by the F.C.I. in accordance with the provisions mandated by law for the mode of proof of documents. The arbitrator was satisfied with the claim as made by the F.C.I. and the statement of the losses furnished by it. The award (Ex.A1) passed by the arbitrator reads as follows:
I do hereby make my award as follows:
I find that the contractor committed breach of the contract and that as a consequence the Food Corporation of India suffered a loss to the extent of Rs. 1,70,061.34 (Rupees one lakh, seventy thousand, sixty one and paise thirty four only). Accordingly, I award Rs. 1,70,061.34 (Rupees one lakh, seventy thousand, sixty one and paise thirty four only) in favour of the Food Corporation of India and direct the contractor to pay the said amount to the Food Corporation of India.” A perusal of the above award un-doubtly shows that no reasons whatsoever have been recorded by the Arbitrator for passing of the award. Clause XIX of the Work Agreement relating to the Arbitration reads as under:
XIX. Arbitration:- All disputes and differences arising out of or in any way touching or concerning this agreement whatsoever (except as to any matter the decision of which is expressly provided for in the contract) shall be referred to the sole arbitration of any person appointed by the Managing Director of the Food Corporation of India. It will be no objection to any such appointment as the persons appointed is or was an employee of the Corporation that he had to deal with the matters to which the contract relates and that in the course of his duties as such employee of the Corporation he had expressed views on all or any of the matters in dispute or difference. The Award of such Arbitrator shall be final and binding on the parties to this contract. It is a term of this contract that in the event of such Arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, the Managing Director of the Food Corporation of India at the time of such transfer, vacation of office or inability to act shall appoint another person to act as Arbitrator. Such person shall be entitled to proceed with reference from the stage at which it was left by his predecessor. It is also a term of this Contract that no person other than a person appointed aforesaid should act as Arbitrator and if for any reason that is not possible the matter is not to be referred to Arbitration at all.
XX XX XX XX XX XX XX XX It is further provided that the Arbitrator may, from time to time with the consent of the parties enlarge the time for making and publishing the Award. The costs of and in connection with arbitration shall be in the discretion of the Arbitrator who may make a suitable provision for the same in his Award. Provided further that in all cases where the amount of the claim in dispute is Rs. 25,000/- and above, the Arbitrator shall record his reasons for the Award. [Emphasis added]
The proviso to the above clause XIX envisages that in all cases where the amount of the claim in dispute is Rs. 25,000/- and above, the arbitrator shall record his reasons for the award. In Raipur Development Authority v. M.S. Chokhamal Contractors A.I.R. 1990 S.C. 1426, a five judge bench of the Supreme Court held that an award passed under the Act is not liable to be remitted or set aside merely on the ground that no reasons have been given in its support except where the arbitration agreement or deed of submission, or an order made by the court such as the one under Section 20 or Section 21 or Section 34 or the Act, or the statute governing the arbitration requires that the arbitrator or the umpire should give reasons for the award.
9. In the case in hand the proviso to Clause XIX of the Work Agreement as already noticed specifically enjoins the recording of reasons where the amount of claim in dispute is Rs. 25,000/- and above. Therefore, for the failure of the arbitrator to record reasons in support of its award would necessarily require the passing of an appropriate order to repair and remedy the infraction of clause XIX of the Work Agreement, which would include the award not being made a rule of the Court.
10. Even otherwise the arbitrator was required to make the award within four months of the date of reference of the dispute to the arbitrator. The arbitrator took up the arbitration proceedings on 2.8.1982 and thereafter notices were issued for appearance of the respondent. The registered cover sent to the respondent for his appearance before the arbitrator on 5.1.1983 is reported to have been received back with the report that he has refused service. However, further opportunities were given to him to put in appearance and ultimately the award was passed on 25.5.1983. Section 3 of the Act relates to the provisions implied in an arbitration agreement. It is provided therein that an arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference. Clause 3 of the First Schedule envisages that the arbitrators shall make their award within four months after entering on the reference or having called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow. In fact the provisions of Clause XIX of the work Agreement itself enjoins that the arbitrator may from time to time with the consent of the parties enlarge the time for making and publishing the award. Even if it is taken that the respondent Ram Lubhaya had not put in appearance before the arbitrator in that case also it is not shown as to whether any consent of the petitioner -FCI was taken for enlarging the time for making and publishing the award. In State of Punjab v. Hardyal (supra), it was held that a perusal of Sections 3 and 28 and Clause 3 of Schedule I of the Act indicates that it is open to the parties to an arbitration agreement to fix the time within which the arbitrator must give the award, but it has to be so stated in the agreement itself. If per chance no time has been specified by the parties in the arbitration agreement, then by virtue of operation of Section 3 read with Clause 3 of the First Schedule the award must be given within four months of the arbitrator entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow. Besides, Sub-section (1) of Section 28 is very wide and confers full discretion on the Court to enlarge time for making the award at any time. The discretion, however, is to be exercised judiciously. Sub-section (2) of Section 28 makes it evident that the Court alone has the power to extend time. It further provides that a clause in the arbitration agreement giving the arbitrator power to enlarge time shall be void and of no effect except when all the parties consent to such enlargement. It is not open to arbitrators at their own pleasure without consent of the parties to the agreement to enlarge time for making the award. It was further held that if an award is given beyond the prescribed time limit of four months, the parties are not estopped from challenging it. Therefore, in the circumstances even if it is taken that respondent Ram Lubhaya was proceeded against ex-parte he is not estopped from challenging the award passed by the arbitrator on the ground that it was passed beyond the time limit provided by the statute. The submissions made by the petitioner-FCI that the award is a reasonable award and also that there is evidence on record is without basis. In fact the arbitrator has not taken any evidence on record. The letters produced have not been proved on record in accordance with law and neither has any one appeared before the arbitrator to tender the letters in evidence.
11. Even otherwise no (sic) of jurisdiction is pointed out in the orders passed by the Courts below. In M.L. Sethi v. R.P. Kapur , it was held that the jurisdiction of the High Court under Section 115 C.P.C. is a limited one. The Section is not directed against the conclusion of law or fact in which the question of jurisdiction is not involved. Section 115 empowers the High Court to satisfy itself on three matters: (a) that the order of the subordinate court is within its jurisdiction; (b) that the case is one in which the Court ought to exercise jurisdiction; (c) that in exercising jurisdiction the Court has not acted illegally, that is, in breach of some provisions of law, or with material irregularity by committing some error of procedure in the course of the trial which is material in that it may have affected the ultimate decision. And if the High Court is satisfied on these three matters it has no power to interfere because it differs from the conclusions of the subordinate court on questions of fact or law. A distinction must be drawn between the errors committed by subordinate courts in deciding questions of law which have relation to, or are concerned with, questions of jurisdiction of the said court, and errors of law which have no such relation or connection. An erroneous decision on a question of law reached by the subordinate court which has no relation to questions of jurisdictions of that court, cannot be corrected by the High Court under Section 115. Apparently there has been no improper or illegal exercise of jurisdiction by the Courts below and neither is it shown that the orders that have been passed by the Courts below in exercise of their jurisdiction have been passed with material irregularity or illegality which would warrant interference by this Court in exercise of its powers under Section
115 C.P.C.
For the fore-going reasons, there is no merit in this petition and the same is accordingly dismissed.