Miscellaneous Appeal No. 114 of 1999 ( R)
............
Against the judgment dated 23.12.1998, passed by Sub Judge-II at
Saraikella in Title Suit No. 8 of 1990.
............
National Thermal Power Corporation Ltd. ........Appellant
Versus
Engineers Enterprises ..........Respondent
With
Miscellaneous Appeal No. 52 of 1998 ( R)
............
Against the judgment dated 19.1.1998, passed by Sub Judge-II at
Saraikella in Title Suit No. 7 of 1990.
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National Thermal Power Corporation Ltd. ........Appellant
Versus
Engineers Enterprises ..........Respondent
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For the Appellant : Mr. Sudarshan Srivastava, Advocate
Mr. K.K. Ambastha, Advocate
in both cases.
For the Respondent : Mr. G.N. Chandra, Advocate in both cases
PRESENT
THE HON'BLE MR. JUSTICE R.K. MERATHIA
-------
C.A.V. On 15.4.2009 Delivered on 5/05/2009
/5/05/2009 Both these appeals arise out of two separate contracts and
involve common questions of facts and law. They were heard together
and are being disposed of by this common order.
2. Miscellaneous Appeal No. 114 of 1999 ( R) arises out of the
contract dated 31.10.1988/2.11.1988, entered into between the parties
for construction of roads, drains and culverts at 400/220 K.V.
Jamshedpur Sub Station of the appellant ( subject matter of Title Suit
no. 8 of 1990).
3. Miscellaneous Appeal No. 52 of 1998 ( R) arises out of the
contract dated 31.10.1988/2.11.1988 for construction of boundary wall
and switchyard fencing at 400/220 KV Jamshedpur Sub Station of the
appellant ( subject matter of Title Suit no. 7 of 1990).
4. In course of performance of the said contracts, certain
disputes and differences arose between the parties. In view of arbitration
agreement contained in clause 56, the respondent-contractor made an
application under Section 20 of the Arbitration Act, 1940 ( the Act for
short) before the learned Sub Judge, Saraikella. By order dated
24.4.1992
, Mr. Manohar Sahay, retired General Manager of the
appellant, was appointed as sole arbitrator with the consent of the
parties. The parties submitted their pleadings, documentary and oral
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evidence and advanced their oral and written submissions before the
arbitrator. After hearing the parties, the Arbitrator made the two Awards
in question both dated 29.4.1996.
In the Award in question in Miscellaneous Appeal No. 114 of
1999, against a claim of Rs.18,74,600.00, an amount of Rs.7,70, 000.00
was awarded.
In the Award in question in Miscellaneous Appeal No. 52 of
1998 ( R), against a claim of Rs.22,62,884.00, the arbitrator awarded
Rs.7,97,974.00.
The counter claims of the appellant were rejected. In both
the awards, pendent elite simple interest @ 10% per annum on the said
amount was awarded from the date of first sitting i.e. 19.8.1992 till the
dates of the Awards and if the said amount plus interest aforesaid was
not paid within 30 days, the awarded amount together with interest was
to carry further simple interest @ 10% per annum till the date of
satisfaction of the Award or date of decree following judgment upon the
Award, whichever was earlier.
5. The appellant filed objections to the awards, under Sections
15, 16 and 30 of the Act. After hearing the parties, learned Sub Judges
rejected the objections, made the Award rule of the Court; and decreed
the suit. The Award was to form part of the decree.
It may be noted here that in both the suits, the impugned
orders were passed by two different Subordinate Judges.
6. Learned counsel for the appellant made the following oral
and written submissions:-
” To sum up it is submitted that the Award as well
as the impugned orders are not sustainable in the eye
of law on the following grounds.
(i) The Award does not disclose any reason,
considerations or “Findings”.
(ii) The Arbitrator while rejecting the claims has
over looked the relevant terms & conditions of
the contract as well as special condition of the
contract entered between the parties.
(iii) Despite of submission of numerous documents,
letters and facts, the Arbitrator has failed to
consider any of these documents while passing
the Award.
(iv) The learned trial court has also erred in not
considering the legality, propriety and validity of
the Award on the touch stone of “misconduct” as
3envisaged u/s 30 of the Act and also other
provisions of the 1940 Act.
(v) By awarding a claim though lesser than claimed
cannot waive the reasons, considerations or
findings at least in preliminary manner by the
Arbitrator in its Award”.
7. On the other hand counsel for the respondent supported the
Award as well as the impugned judgments.
8. After hearing the parties, going through the records
carefully, and keeping in view the legal position, in my opinion, no
grounds are made out for interfering with the awards and the impugned
orders in question, for the following reasons.
9. The only question involved in these appeals is as to whether
the Arbitrator, misconducted himself or the proceeding in making the
impugned awards?
10. On behalf of the appellant much emphasis was laid on the
letter dated 24.4.1992, issued by learned Sub Judge to the Arbitrator,
which reads as follows:-
“To,
Sri Mahohar Sahay
Retd. G.M. N.T.P.C. Ltd.,
36/6 ” Upasana”,
Nehuru Nagar East,
P.O. Bhilai,
Madhya Pradesh.
Whereas you have been appointed Arbitrator for
the purpose of the above noted suit, you are required
to give your award on the basis of your finding after
hearing both the parties duly.
The award is to be submitted to this Court
within three months from this date”.
11. On the basis of this letter, it was submitted on behalf of the
appellant that the court required the Arbitrator to give Award on the
basis of ‘finding’ but the award does not disclose any reason,
consideration or findings.
12. It appears from the order dated 20.4.1992 passed by the
learned court below that the court ordered to inform the Arbitrator about
his appointment with a direction to submit his Award within three
weeks. In this order, the Arbitrator was not directed to give a reasoned
Award. In the said letter dated 24.4.1992, issued pursuant to the said
order also, the learned court below simply asked the Arbitrator to give
Award on the basis of his findings after hearing the parties. This letter
cannot be read as statute. Finding means conclusion/decision. Thus, on
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the basis of the said letter, it cannot be said that the arbitrator was
required to pass a reasoned award.
13. Moreover, on perusal of clause 56 of the agreement, it is
clear that a reasoned award was not contemplated by the parties from
the arbitrator. It further appears from the Award that the parties were
duly heard and the arbitrator considered their respective cases and the
evidences brought by them on the record. He inspected the site in
presence of the parties. On scrutinizing the pleadings, evidences and
submissions, he reached findings of facts thereon and on that basis
made his Award. It appears from the forwarding letter sent by the
Arbitrator to learned Sub Judge dated 29th April, 1996 that while
submitting the Award, a list of documents, pleadings along with
documents of the proceedings and list of the same was enclosed. It also
appears that the parties confirmed the proceedings of cross-examination
of witnesses. It further appears that the counter claims of the appellant
were considered, but were rejected. The parties and the arbitrator well
understood that neither as per clause 56 of the agreement, nor as per the
said order/letter of the court, the arbitrator was required to make a
reasoned award.
14. The relevant portion of the Award reads as follows:-
” AND WHEREAS the parties duly submitted to
my jurisdiction filed pleadings and documentary
evidence before me and also led oral evidence and
made oral and written submissions on questions of
facts and law before me.
AND WHEREAS I held numerous sittings, heard
the parties inspected the site in the presence of both
parties, carefully went through and scrutinized their
pleadings, evidence and submissions, reached findings
of facts thereon, carefully studied the contract and
interpreted and applied the same to determine the
consequences of the aforesaid facts as found by me
and thus and otherwise carefully considered the entire
matter”.
15. In AIR 1990 S.C. 1426-Raipur Development Authority Vs.
M/s Chokhamal Contractors., the Constitution Bench held as follows:-
“19. It is now well-settled that an award can neither be
remitted nor set aside merely on the ground that it does not
contain reasons in support of the conclusion or decisions
reached in it except where the arbitration agreement or the
deed of submission requires him to give reasons. The
arbitrator or umpire is under no obligation to give reasons in
support of the decision reached by him unless under the
arbitration agreement or in the deed of submission he is
5required to give such reasons and if the arbitrator or umpire
chooses to give reasons in support of his decision it is open
to the Court to set aside the award if it finds that an error
of law has been committed by the arbitrator or umpire on the
face of the record on going through such reasons. The
arbitrator or umpire shall have to give reasons also where
the court has directed in any order such as the one made
under Section 20 or Section 21 or Section 34 of the Act that
reasons should be given or where the statute which governs
an arbitration requires him to do so”.
16. In AIR 1963, SC 1677-Smt. Santa Sila Devi Vs. Dhirendra
Nath Sen, it was observed as follows:-
” Where an award given by the arbitrator is filed in
Court and it was challenged on the ground of its
incompleteness, the Court has to bear in mind certain basic
positions. These are (1) a Court should approach an award
with a desire to support it, if that is reasonably possible,
rather than to destroy it by calling it illegal; (2) unless the
reference to arbitration specifically so requires the arbitrator
is not bound to deal with each claim or matter separately,
but can deliver a consolidated award. The legal position is
clear that unless so specifically required an award need not
formally express the decision of the arbitrator on each matter
of difference, (3) unless the contrary appears the Court will
presume that the award disposes finally of all the matters in
difference; and (4) where an award is made de praemissis
( that is, of and concerning all the matters in dispute referred
to the arbitrator), the presumption is, that the arbitrator
intended to dispose finally of all the matters in difference;
and his award will be held final, if by any intendment it can
be made so”.
17. In AIR 1959, Calcutta 156-Smt. Padmabati Paul and
others Vs. Pannalal Paul and others, it was observed that where the
issues are framed by the arbitrator in the proceedings before himself,
the law does not require the arbitrator to answer each one of the issues,
and the failure to answer the issues does not amount to misconduct.
18. In AIR 1960, Calcutta 693-Pannalal Paul and others Vs.
Padmabati Paul and others, several issues were raised in the
reference. It was contended that the arbitrator was duty bound to
answer the issues raised specifically and having not done so he mis-
conducted himself in not answering the issues. It was held that the
arbitrator was not bound to make separate and distinct finding on each
issue and he could award on whole case.
19. In AIR 1965 SC 214-Jivarajbhai Ujamshi Sheth Vs.
Chintamanrao Balaji, the Supreme Court observed as follows:-
” It is not open to the court to speculate, where no
reasons are given by the arbitrator, as to what impelled the
arbitrator to arrive at his conclusion. On the assumption that
the arbitrator must have arrived at his conclusion by a
certain process of reasoning, the Court cannot proceed to
determine whether the conclusion is right or wrong. It is not
open to the Court to attempt to probe the mental process by
which the arbitrator has reached his conclusion where it is
not disclosed by the terms of his award”.
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20. In AIR 1989 SC 777-Puri Construction Pvt. Ltd. Vs.
Union of India, it was observed as follows:-
” When a court is called upon to decide the objections
raised by a party against an arbitration award, the
jurisdiction of court is limited, as expressly indicated in the
Act, and it has no jurisdiction to sit in appeal and examine
the correctness of the award on merits.
21. In AIR, 1994 SC 2562-Bijendra Nath Srivastava (dead)
through L.Rs. Vs. Mayank Srivastava and others, it was observed in
paragraph 46 that it was permissible for the arbitrator to deliver
consolidated lumpsum award.
22. Learned counsel appearing for the parties made submissions
on the merits of their claims/counter claims but this Court is not
required to go into the merits of the claims/counter claims in view of the
fact that the Arbitrator has not disclosed his mind/reasons in the
Awards and it has already been held that Arbitrator could make Award
without disclosing the reasons. The argument with regard to frustration
of contract is also misconceived as admittedly the respondent started the
work.
23. In view of the facts and circumstances; and the legal
position, noticed above, it cannot be accepted that the Arbitrator had
misconducted himself or the proceedings and therefore the learned court
below, after considering the objections raised on behalf of the appellant
in detail has rightly rejected them.
24. In the result, it is held that the arbitrator has not
misconducted himself or the proceedings and accordingly the Awards in
question are upheld and the appeals are dismissed. However, no costs.
(R.K. Merathia, J)
Jharkhand High Court, Ranchi
Dated the 5th day of May, 2009
Rakesh/AFR