JUDGMENT
K.P. Mohapatra, J.
1. This appeal is directed against the judgment and decree passed by the learned Subordinate Judge, Berhampur. The plaintiff is the appellant.
2. Facts are stated in brief. The appellant
entered into a contract with the respondent for construction of Ramaguda Minor Irrigation Project within Kukudakhandi Block in Ganjam district at an estimated cost of Rs. 9,99,510/- and executed Agreement No. 4 , F-2 of 1973-74 on 4-5-1973 which contained an arbitration clause in the event of a dispute. Although the construction of the project was to be completed within 18 months from the date of execution of the agreement, yet for execution of extra and additional items of work, it came to a close on 10-8-1975. The appellant received a sum of Rs. 23,74,001/-under 13 running bills, yet he raised a dispute and filed an application under Section 8 of the Arbitration Act (hereinafter referred to as ‘the Act’) before the learned court below for appointment of an arbitrator in accordance with the arbitration clause of the agreement. The learned Subordinate Judge appointed an arbitrator who entered into arbitration and after hearing both parties made an unreasoned lump sum award in appellant’s favour for the sum of Rs. 15,23,657/- with interest thereon at the rate of 10% per annum from 9-9-1975 till the date of the decree or payment whichever was earlier.
3. The respondent objected to the award on the grounds that it had objected to the appointment of the arbitrator, the arbitrator had refused to adjourn the arbitration proceeding pending disposal of the petition for his removal, he did not consider the material documents produced by the department and misconducted himself, and lastly the arbitration proceeding was virtually disposed of ex parte.
4. On consideration of the impugned judgment it appears that at the time of hearing the following three points were urged before the learned Subordinate Judge : —
(1) the arbitrator had no jurisdiction to arbitrate upon disputes arising out of the execution of additional work;
(2) the arbitration proceeding was disposed of ex parte; and
(3) the award was based on no evidence. The learned Subordinate Judge came to hold on the first point that the arbitrator had.
jurisdiction to arbitrate upon disputes for
execution of additional work. On the second
point he held that the respondent had
participated in the arbitration proceeding and
so by no stretch of imagination it could be ;
said that the award was made ex parte. On
the third point he noticed the settled position
of law that the civil court cannot sit in appeal
over the decision of the arbitrator and yet
came to the following conclusion :–
“……. But under Section 30 of the Act the court can
set aside the award if it suffers from error apparent on the face of it. In the present case as against the estimated cost of Rs. 9,99,510/-the plaintiff contractor has already received Rs. 23,74,001/- in view of the execution of additional work. The award of Rs. 15,23,657/-with interest at the rate of 10% per annum thereon from 9-9-1975 till the date of decree or payment over and above the payments already made, is quite excessive having no nexus with the work value and as such is unreasonable. This lack of nexus can be construed as an error apparent on the face of the award Thus, the award is illegal……”
Accordingly he set aside the award and dismissed the suit with a direction that if the dispute persists between the parties, the same may be referred to the Arbitration Tribunal, Orissa, Bhubaneswar under Section 41A of the Act.
5. Mr. B. M. Patnaik, learned counsel appearing for the appellant, strenuously urged that the learned Subordinate Judge having noticed the settled position of law with regard ; to the jurisdiction of the civil court for setting aside the unreasoned lump sum award of an arbitrator, committed serious illegalities for holding that the award was quite excessive having no nexus with the work value and as such was unreasonable. He submitted that the award in this case is not available to be challenged either on facts or on law. Mr. Indrajit Roy, learned Additional Government Advocate, very candidly conceded that according to the settled position of law, it is very difficult to attack an unreasoned and lump sum award of an arbitrator because of the civil court’s limitation on jurisdiction, yet he urged that the dispute raised by the appellant for additional work said to have
been executed by him had no basis. The arbitrator did not refer to material documents and as a matter of fact the award was based on no evidence.
6. It is at the outset necessary to make a brief reference to the settled position of law that an arbitrator is competent to pass a non-speaking lump sum award which is valid and effective. The court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record for the purpose of finding out whether or not the arbitrator has committed an error of law and that the award of the arbitrator can be set aside on the ground of error of law on the face of the award only when in the award or in a document incorporated with it, as for instance a note appended by the arbitrator stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous. This position of law has been exposed in several decisions, such as, AIR 1967 SC 1032, Union of India v. Bungo Steel Furniture Private Ltd., M. A.N.O. 10 of 1982, State of Orissa v. Birendra Kumar Pathak, decided on 12-12-1984* in which reference has been made to a catena of decisions on this subject, (1985) 2 Orissa LR 431, Golak Chandra Roy v. Secy. Irrigation Department M.A. No. 543 of 1982, Golak Chandra Roy v. Secy. Irrigation Department (decided on 20-9-1985), (1987) 63 Cut LT 34, State of Orissa v. Sri Khemchand Agarwala, and M.A. No. 166 of 1983, State of Orissa v. Shyam Sundar Panigrahi, (Decided on 11-3-1987)
7. It is now necessary to apply the legal principles to the facts of the case. The relevant portion of the award is quoted below : —
“Whereas I took upon myself the burden of the said Arbitration Case and entered into reference on 16-11-81 and conducted hearings on 8-12-1981, 19-12-81, 20-8-82, 16-9-82, 30-9-82, 12-10-82, 22-10-82, 2-11-82, 7-12-82, 30-12-82, 5-1-83, 28-1-83, 2-2-83, 8-2-83, 18-2-83, and finally concluded the hearing on 25-2-83.
Whereas the total amount claimed by the claimant-plaintiff inclusive of damages, compensation and interest @ 18% per annum
from 9-9-75 till 18-3-83 (date of award) is Rs. 51,27,530/- (rupees fifty one lakhs, twenty-seven thousand, five-hundred thirty) only to be payable by the opposite party-Defendant, which has been denied by the respondent, and
Whereas the total amount counter-claimed by the Opposite Party-Defendant is Rs. 2,11,400/- (Rupees two lakhs eleven thousand four hundred) only to be payable by the claimant-plaintiff, which has been denied by the claimant.
Having heard both the parties and their advocates and after careful consideration of the matters and documents put forth before me, I have come to the conclusion that the Respondent shall pay to the claimant a principal amount of Rs. 15,23,657.00 (Rupees fifteen lakhs twenty three thousand six hundred fifty seven) only towards the claims.
The award amount shall bear interest @ 10% (ten per cent) per annum from 9-9-75 till date of decree or payment, whichever is earlier.”
On the face of this unreasoned lump sum,
award, there is no apparent error of law. The
arbitrator is stated to have considered the
evidence and documents placed by the parties,
before him on several dates. There is nothing
to indicate that he had misconducted himself
by taking up the arbitration proceeding exparte or making an ex parte award. In fact
this theory has been exploded by the learned
Subordinate Judge himself in the impugned
order. The court cannot sit in appeal on the
award and go into questions of fact, such as,
consideration of evidence either oral or
documentary unless they have been made
part of the award and appended to it. As a
matter of fact, as rightly pointed out by the
learned counsel appearing for both parties,
the jurisdiction of the court to interfere with
an award of an arbitrator is extremely limited
as set down by AIR 1967 SC 1032 (supra). As
rightly pointed out in M.A. No. 543 of 1982
(supra) the mere fact that the awarded amount
is in excess of the contractual amount is no
ground to vitiate the award. In the light of the
above, it is difficult to uphold the finding of
the learned court below that because excessive
payment had been made to the appellant
having no nexus to the work value an error
apparent on the face of the award had been committed and as such it is unreasonable. On the other hand, I am unable to persuade myself to depart from the settled legal principles which have held the field for decades and find no material to interfere with the unreasoned lump sum award, although the sum included is quite high. There is no rule of law nor any precedent that if the award is in respect of a heavy amount it should on the face of it be deemed as unreasonable, wrong and illegal so as to be set aside. This being the position, interference with the award is unwarranted,
8. The arbitrator has granted pendente lite interest at the rate of 10% per annum. For detention of money the appellant is also entitled to interest under Section 29 of the Act (See (1981) 51 Cut LT 333, State of Orissa v. Rama Chandra Sahu). In the facts and circumstances of the case, I award interest in favour of the appellant at the rate of 6% per annum from the date of the decree to be paid on the principal sum as adjudged by the award
9. For the aforesaid reasons, the appeal is allowed and the impugned order passed by the learned Subordinate Judge is set aside. The award passed by the arbitrator is made a rule of the court. The appellant shall be entitled to interest at the rate of 6% per annum from the date of the decree to be paid on the principal sum as adjudged by the award. Parties shall bear their own costs of the appeal.