S. Acharya, J.
1. This is an appeal under Section 39 of the Arbitration Act, 1940 (hereinafter referred to the 'Act') against the order dated 9-3-79 of the Subordinate Judge, Bhubaneswar in Misc. Case No. 250 of 1975.
2. The facts, in brief, are that Jajodia Overseas Private Limited, the plaintiff-respondent in this appeal (hereinafter called the 'claimant'), and the Industrial Development Corporation of Orissa Limited, the defendant-appellant in this appeal (hereinafter called the 'I. D. C.') entered into an agreement in the year 1969 by which the I. D. C. agreed to supply certain articles as specified therein to the claimant for export on terms and conditions mentioned in the said agreement. The articles, which the I. D. C. was to deliver to the claimant, were not supplied to the latter, and by letter dated 12-9-69 the I. D. C. cancelled the agreement and intimated the claimant that the offer of the I. D. C. which culminated in the agreement, be treated as withdrawn. After this letter of cancellation, there was some correspondence between the parties. Ultimately, the claimant made a claim of damage for breach of the contract, and by letter dated 27-7-70 to the Chief Secretary to the Government of Orissa, the claimant wanted that the former should adjudicate by arbitration the disputes and differences arising out of the said contract and cancellation of the same as per the arbitration clause in the agreement between the parties. The Chief Secretary declined to act as the arbitrator. Thereafter, the claimant filed Special Suit No. 33 of 1970 in the Calcutta High Court. But the plaint was returned to the plaintiff-claimant to be presented in the proper forum as the said High Court had no jurisdiction to entertain that suit. Thereafter, the plaint was filed in the court of the Subordinate Judge, Bhubaneswar, and it was numbered as O. S. No. 6/72-1.
3. The learned Subordinate Judge by his judgment dated 4-4-73 allowed the prayer made by the claimant and directed the I. D. C. to file the agreement between the parties in that court. Thereafter, by its order dated 28-2-74 the court appointed the arbitrator with the consent of both the parties, and reference of the disputes was made to him by the same order.
4. The arbitrator invited statements from both the parties, and after about 100 sittings in that proceeding he gave his award on 24-9-75 and declared that the claimant was entitled to recover from the I. D. C. Rs. 11,00,344/- only with pendente lite interest at the rate of 6 per cent per annum from 28-2-74 till the date of the award.
The I. D. C. thereafter filed a petition under Sections 30 and 33 of the Act in the court below for setting aside the award mainly on the ground that the arbitrator in adjudicating the disputes and giving his award on the same misconducted himself in various ways, and so the said award was invalid and was liable to be set aside. The claimant contested the said petition on all fours and urged that the said award was valid in all respects and was binding on the parties and should be made a rule of the court with future interest in favour of the claimant. The court below by its impugned order dismissed the above petition of the I. D. C,, confirmed the award, made the same a rule of the court and directed a decree to be drawn up in accordance with the said award. It further ordered that the claimant was entitled to future interest at the rate of 6 per cent per annum.
5. The I. D, C. has preferred this Miscellaneous Appeal against the impugned order.
6. The question whether the award is a speaking award or not should receive priority of consideration in preference to the other points raised in this appeal.
6 (a). According to Mr. Patnaik, the learned counsel for the appellant, the damage of Rs. 11,00,344/, granted in the award, is based on reasons recorded by way of answers to the 19 issues framed by the arbitrator, and the ultimate decision of the arbitrator is the result of conclusions on the said issues, and as such the award is reasoned and speaking award. Mr. Mukherjee, the learned counsel for the claimant, refutes the said contention by saying that apart from stating the premises and circumstances in which the said award was given and stating only the conclusions on the issues framed on the disputes referred to the arbitrator in bald, cut and dry manner, no reasons or grounds for the said conclusions have been stated in the award and so it is not a speaking award.
7. The rival contentions on the above point resolve to a question of construction of the award.
8. I would divide the award into three parts. The first part of the award (i.e. up to the enumeration of the issues and answers thereto) consists of only the facts, premises and circumstances under which the arbitrator was appointed and called upon to give his award and the procedure followed by him in giving the award. The statements to the above effect in the first part of the award do not indicate any reason for the arbitrator's conclusions on the issues in the later part of the award. In the second part of the award 19 issues have been enumerated one by one, and against each of the issues only the arbitrators conclusion thereto is baldly stated. The contentions or submissions of both the parties on the issues or the facts and evidence considered by the arbitrator for arriving at the said conclusions are not stated or even indicated in the award; and the answer to each issue is a bald conclusion without ascribing any reason or premise for the said conclusion. Nothing has been said to justify the conclusions or answers to the issues. The last two paragraphs in the award, forming the operative and directive part of me same, merely say that the claimant is entitled to recover from the I. D. C., Rs. 11,00,344/- only with pendente lite interest at a particular rate and that the parties would bear their own costs of the proceedings. That too does not indicate the basis, reason, ground or calculation on which the said amount is awarded.
8 (a). Because of the words 'in the result' prefixed to the said operative and directive part of the award, Mr. Patnaik, the learned counsel for the appellant, contends that the damage awarded to the claimant is based on what is stated in the previous paragraphs, and so the award is a reasoned award. The said contention is without any substance. On the mere statement of facts about the premises and circumstances in which the arbitrator was appointed and he gave his award and/of on his bald conclusions on the issues framed by him as stated above, it cannot be said that the award is a speaking award. In the case of a reference under Section 20(4) of the Act, the arbitrator has to decide each of the disputes referred to him. In giving his decision on each of the disputes he may only state his conclusion thereto without giving any reasons for the same, or he may proceed to decide each of those disputes on a discussion and consideration of the facts, evidence and materials before him as is required to be done by a court of law. In former case, it will be an unreasoned award and in the latter it will be a reasoned or speaking award. Mere answers or conclusions on the different points or disputes referred to the arbitrator and a bald direction either to pay or not to pay any amount to the claimant as in this case, would not make the award a speaking! one. On a careful perusal of the award I am of the opinion that the impugned award is not a reasoned or speaking award.
9. Mr. B. M. Patnaik, the learned Advocate General appearing on behalf of the I. D. C,, has urged that all disputes and claims which arose out of the contract were referred to the Chief Secretary to the Government of Orissa by the claimant, and since the said statement containing the disputes and claims which arose between the parties was neither before the court which appointed the arbitrator nor before the arbitrator who drew up the award, the arbitration proceeding and the award resulting therefrom are invalid and are liable to be set aside.
To refute the above submission, Mr. Mukherjee, the learned counsel for the respondent, has submitted that the facts alleged as the basis of the said contention are incorrect, and the contention so far as it relates to the arbitration proceeding is not worthy of consideration as the award in this case is not a speaking award. He, however, submits that from the judgment and orders of the court below in O. S. No. 6/12 and the relevant minutes of the sittings before the arbitrator it is evident that the said statement of claim was before the court and the arbitrator when they were in seisin over the matter.
9 (a). In paragraphs 4, 5 and 8 of the Judgment of the court below dated 4-4-1973 in O. S. No. 6/72-1 it is stated:--
'4. Since there was a dispute arising out of the agreement, the plaintiff-company by their letter dated 27-7-1970 to the Chief Secretary to the Government of Orissa referred the disputes and differences to his sole arbitration. They also forwarded a statement of claim in the said letter. Copy of the letter to the Chief Secretary along with the statement of claim was forwarded o the defendant-company (Annexure M). As no reply was received from the Chief Secretary, the plaintiff-company again sent a letter on 17-8-1970 (Annexure N) drawing his attention to their previous letter and requesting him to fix a date for proceeding with the arbitration... ........ On 26-10-1970, the Secretary to the Government of Orissa, Industries Department informed the plaintiff-company that the Chief Secretary reiterated his unwillingness to act as the Arbitrator. After this, the plaintiff-company was obliged to come forward with the suit which he instituted originally in the High Court at Calcutta in the original side but after it was returned on 1-2-1972 for absence of jurisdiction to be filed in the Bhubaneswar Court, the suit was filed here in this Court on 10-2-1972.'
'5. The defendant-company filed written statement referring therein to the offer made by the defendant-company dated 3-4-1969 and denying all other facts. ...... It was stated therein that the allegations made in those paragraphs (Paragraphs 4 to 10 of the petition) relate tothe merits of the case which would bethe subject-matter of the arbitration proceedings and the defendant-company wasadvised not to deal with those allegations at present and, therefore, they reserved the right to do so at the appropriate time.'
xx xx xx xx xx xx'8. ...... The defendant-company has admitted about the existence of an agreement inasmuch as they have said in their written statement that there is considerable dispute regarding the allegations made by the plaintiff-company which would be the subject-matter of arbitration. In the circumstances, I find that there is dispute between the parties as envisaged in the agreement dated 3-4-1959 for reference to be made to the arbitrator.'
In Misc. Appeal No. 67/73 it has been, inter alia observed as follows :--
'Some disputes arose in the matter of effecting supplies and therefore, the supplier-respondent raised a dispute and called upon the Chief Secretary, the named arbitrator, to decide the disputes. The Chief Secretary declined. Thereafter the supplier came before the learned Subordinate Judge at Bhubaneswar for a direction under Section 20 of the Arbitration Act.'
The relevant portion of order No. 50 dated 28-2-1974 passed in O. S. No. 6/72-1 is as follows :--
'Sri H. Mohapatra, retired Judge, Patna High Court, is appointed to act as the arbitrator to give his award in the disputes between the parties as enumerated in their respective pleadings and the order of this Court. Reference be made to him requesting him to make the award by 30th June, 1974. Copy of the plaint, written statement and the order of this Court be sent to the arbitrator.'
From all these, and especially the underlined portion of para 4 of the judgment of the court below quoted above, it is quite evident that the court had a copy of the statement of claim preferred by the claimant before the Chief Secretary and it was marked as Annexure M and the court considered the same. The award on the face of it does not show in clear terms as to whether or not the said statement of claim was actually before the arbitrator. Mr. 'Mukherjee, however, asserts that a copy of that statement of claim was filed before the arbitrator. This assertion is directly supported by the minutes recorded by the arbitrator in his 4th sitting on 5-5-1974 where it is stated:
'A copy of the statement of claim which the claimant company had sent to the Chief Secretary, Government of Orissa along with their letter of 27th July, 1970 has also been filed by the claimant company,'
In view of the above facts the factual basis on which the above contention is based is not correct. So the contention on this ground alone deserves to be rejected.
9 (b). Apart from that, even if the said statement of claim would not have been filed in the court during the pendency of the suit or before arbitrator during the arbitration proceeding that would not have been of any consequence or effect as it is well settled that the arbitrator has to confine his finding to the 'order of reference' made by the court, which term clearly means reference of particular disputes under the terms of the arbitration agreement by the court to the arbitrator. The court is to make 'the order of reference' on a consideration of all that is brought before it at the hearing of the suit,, and it is not to confine its consideration to any particular statement of claim or counters made thereto at any earlier stage before some other person or authority. After receiving the order of reference the arbitrator has to confine his decision to the particular disputes referred to him. and he cannot enlarge or abridge the scope of the reference and entertain fresh claims without further order of reference from the court. (AIR 1977 SC 2014; AIR 1976 SC 1745; AIR 1979 Orissa 19 and AIR 1958 Cal 490 may be seen). Of course in deciding the disputes referred to him the arbitrator is free to and should consider and decide all aspects requiring decision on the questions referred. That being the position of law it did not matter much whether the statement of claim was or was not before the court or the arbitrator.
9 (c). If the court did not refer any dispute which was mentioned in the statement of disputes and claims filed before the Chief Secretary or referred any dispute not mentioned therein, and the I. D. C. was aggrieved or affected by such reference, it could have agitated that matter at the proper time in the proper forum. It is submitted by Mr. Mukherjee and not controverted by Mr. Patnaik that no such question was agitated by the I. D. C. in any forum at any earlier stage. On the above considerations, I find that there is no weight or substance in the above contention.
10. Mr. Patnaik's contention that the arbitrator committed legal misconduct as he ignored a material document, namely the statement of claim filed before the Chief Secretary by the claimant, is without any substance. The award is not a speaking award and the allegation that the arbitrator ignored that document is not evident on the face of the award. That being so, the above contention cannot be allowed to be raised and the correctness of the same cannot be examined by probing into the other documents on record. Apart from the above, it has been found in paragraph above that the said statement of claim was filed before the arbitrator. There is mention about the said statement in the award itself. On these facts one can well nigh proceed with the presumption that the arbitrator, instead of ignoring the said document, took the same into consideration. Moreover, the said statement of claim is not a material document requiring peremptory consideration by the arbitrator for reasons stated in paragraph 9 (b) above, On the above considerations the above contention is rejected.
It has been contended by Mr. Patnaik that all disputes referred to the arbitrator have not been decided by him and certain matters decided by him were not referred to him, and therefore, the award is invalid and is liable to be set aside.
The award is not a speaking award. There is absolutely nothing on the face of the award to show that all disputes referred to the arbitrator have not been decided by him and/or that he has decided certain matters which were not referred to him. As the award is not a speaking award and the above facts, forming the basis of the abovementioned contention put forward by Mr. Patnaik, do not appear on the face of the award, it is not for me to probe into other documents filed before the arbitrator to find out whether the above contention is correct or not. It is well settled that the court has no jurisdiction to investigate into the correctness of the award by examining documentary and oral evidence on record which are not incorporated in the award. The award of the arbitrator can be set aside if the error is apparent on the face of it or from the documents incorporated in it. In this connection the decisions reported in AIR 1967 SC 1030, and AIR 1967 SC 1032; AIR 1965 SG 214, and AIR 1975 SG 230 may be seen. Apart from that there is presumption of completeness of the award, and it shall be assumed that the arbitrator on a consideration of all questions which were referred to him for decision gave his award. (See AIR 1970 SG 753 and AIR 1963 SG 1677). By the order No. 50 dated 28-2-1974 in O. S. No. 6/72 the arbitrator was required to 'give his award on the disputes between the parties as enumerated in their respective pleadings and the order of this Court'. That order also indicates that the copies of the plaint, written statement and the order of that court were sent to the arbitrator. So it can be assumed that the arbitrator must have proceeded to draw up his award on a consideration of the contents of these documents.
11(a). The arbitrator has answered all the issues one by one. Issues were framed with the consent and/or suggestion of the parties. Nothing specific is shown from the award to deduce the conclusion that the said issues do not cover all the points referred to the arbitrator for decision or that any of the issues does not arise for decision on the reference made to the arbitrator. In the award it is specifically stated that the arbitrator carefully considered the written statements, documents and evidence and the arguments and gave his conclusions as recorded in the award in relation to the different issues. All the issues have been answered though no reason has been ascribed to justify the conclusion of the answers. There is no special form in which the award should be made. Mroeover, it is also not necessary for the arbitrator to state his decision separately on each matter in controversy. (See Whitworth v. Hulse; (1866) 1 Ex 251 and AIR 1960 Cal 693 at p 696). Apart from that, as there is nothing in the award to show that certain disputes referred to the arbitrator were not decided by him or that certain disputes which were not referred to him were decided by him, I will not probe into this aspect of the matter any further.
On the above considerations, I do not find any merit or substance in the above contention of Mr. Patnaik.
12. Mr. Patnaik contended that the answer to Issue No. 2 is on erroneous construction of the agreement between the parties and that being so, the award on the face of it is an error of law.
The agreement has only been referred to in the award. Neither the agreement nor any clause thereof has been set out in the award or attached to the award. The arbitrator, in giving his conclusion on Issue No. 2 has not mentioned any provision of the contract nor has he referred to any particular clause of the same in the award, and has not given any reason for the conclusion on that issue. A mere reference to the agreement between the parties in the award does not amount to incorporation of the same or any clause thereof in the award. In view of the above facts and the award being a non-speaking award, the correctness of the above contention is not liable to be assessed and/or challenged.
13. All contentions of Mr. Patnaik regarding alleged errors in the award based on his submission that the agreement between the parries, the pleadings in O. S. No. 6/72, and the statements of claim and counter claims stand incorporated in the award as the arbitrator considered the same for the purpose of arriving at his conclusions on different issues, are not worthy of consideration, as the award is not a speaking award, the alleged errors are not apparent on the face of the award, and the said documents have not any way been incorporated in the award. The said documents are merely mentioned by name in the first part of the award and the contents of those documents or even any portion of the same have not been quoted, attached, mentioned or referred to or even any way apparent on the face of the award. So it cannot be said that the said documents are any way incorporated in the award. If the error alleged relates to the contents of a document and the said contents are not apparent on the face of the award then the court cannot probe into the correctness of the allegation by calling for or bringing out the documents, from the records of the arbitrator's proceedings. That being the position, all submission on behalf of the appellants; about errors, either of law or of fact, based on those documents and/or the contents of the same, are not open to judicial review, since the award is not a! speaking award and the alleged errors are not evident on the face of the award.
13 (a). Mr. Patnaik submitted that even though the contents of the agreement and of the other documents referred to in the award are not physically incorporated in the award the court can look into the said documents for the purpose of assessing the correctness of any finding in the award as was done by their Lordships of the Supreme Court in the case reported in AIR 1955 SG 468.
The above proposition cannot be accepted as correct. The award in that case was a speaking award, and so, the findings therein were subject to scrutiny. An award cannot be set aside by the court unless the error is apparent on the face of the award. 'An error in law on the face of the award', as has been held in AIR 1923 PC 66 at p. 69, 'means that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. It does not mean that if in a narrative a reference is made to a contention of one party that opens the door to seeing first what mat contention is and then going to the contract on which the party's rights depend to see if that contention is sound'. This view is the well settled view on the point and is being consistently followed By all courts. As the award in the case reported in AIR 1955 SC 468 was a speaking award the procedure followed for assessing the different questions raised in that case cannot be followed in a case like the present one before me where the award is not a reasoned award.
14. The contentions put forward on behalf of the appellant, that no specific dispute was referred to the arbitrator by the court and so the arbitration proceeding and the award are nullity in law, is factually incorrect. As stated above, the court by its order dated 28-2-1974 specifically directed the arbitrator 'to give his award on the disputes between the parties as enumerated in their respective pleadings and the order of the court.', All contentions based on the above incorrect allegation do not, therefore, deserve any consideration.
15. It is contended on behalf of the appellant, that the award is bad in law as the arbitrator decided the question of limitation though it had not been referred to him. The reference of disputes to the arbitrator by the Court was in general terms as stated above. In view of the scope, aim and object of the O. S. No. 6/72 the court was not required to advert to the question as to whether the claims put forward by the claimant were barred by limitation or not. That clearly is a concomitant question latently inherent within the scope of the reference and necessarily arises for consideration in a matter like this and is within the jurisdiction of the arbitrator. So he has rightly considered the same in due performance of his job. Apart from the above, from the minutes of the 62nd sitting of the arbitrator, to which my attention was drawn by Mr. Mukherjee, it is quite evident that the appellant (I. D. C.) specifically raised the question of limitation after amending its own written statement and invited a decision thereon. The claimant rightly did not oppose the framing of the said issues. In view of the above facts, the appellant now cannot be heard to say that this question of limitation was not referred to the arbitrator and he should not have decided the same. Moreover, as the plea of limitation was specifically raised in the written statement filed by the I. D. C. in O. S. No. 6/72, that question shall be deemed as a question referred by the court for arbitration in view of the wide terms of the order of reference. On the above consideration the arbitrator was justified in framing an issue on this question and in deciding the same.
16. It has been contended on behalf of the appellant that on the face of the award it is evident that the arbitrator has arrived at inconsistent conclusions, and so he has misconducted the proceedings, and the award therefore is bad in law and is liable to be set aside. In this connection my attention is drawn to Issues Nos. 6,7(b) and 9 (a) and the conclusions thereto and it is stated by Mr. Patnaik that the conclusion on Issue No. 6 is patently inconsistent with the arbitrator's conclusions on Issue Nos. 7 (b) and 9 (a) read together. To appreciate the above contention, the said three issues and the arbitrator's conclusions on each of the said issues as stated in the award are quoted below:
Issue No. 6 'Did the claimant fulfil their obligations under the terms and conditions of the agreement?'
'JOPL fulfilled their obligations under the agreement in question.'
Issued No. 7(b) 'Did the claimant send the original foreign sale contracts to the respondents?'
'JOPL did not send the original foreign sale contracts to I. D. C.'
Issue No. 9(a) 'Were the acts mentioned in para 10 of the counter statement covered by the agreement?'
'The agreement provided for JOPL sending the original foreign sale contracts to the respondent at a certain stage.Reference to para 10 of the counter statement of I. D. C.'
The claimant has been referred to as JOPL in the award. The respondent' mentioned in the answer to Issue No. 9 (a) is the I. D. C.
A mere reading of the said issues and the answers thereto clearly shows that the arbitrator has arrived at inconsistent conclusions on the same matter. The answer to Issue No, 9 (a) says that as per the agreement between the parries the JOPL was required to send the original foreign sale contracts to the respondent at a certain stage and the answer to Issue No. 7 (b) says that the JOPL did not send the original sale contracts to the I. D. C. So the JOPL, i. e. the claimant in this case, did not fulfil the said obligation under the agreement. As that is so, the answer to Issue No. 6, i. e. 'JOPL fulfilled then-obligations under the agreement in question is incorrect and is inconsistent with the answers to Issues Nos. 7 (b) and 9 (a) read together. This inconsistency and error is evident on the face of the award.
16 (a). Mr. Mukherjee submits that the failure of the claimant to send the original foreign contracts to the I. D. C. was of no consequence, and the same did not in any way affect the assessment of the quantum of damages which was the main question for determination before the arbitrator. The submissions made to explain away the inconsistency or belittle the effect of the same are not convincing.
16 (b). The award is not a speaking award. The reasons and considerations on which the arbitrator arrived at the conclusions on the different issues, specially on Issue No. 14, fixing the damages at Rs. 11,00,000/- and odd to be paid by the I. D. C. to the claimant, are not stated in the award. On the failure of the claimant to send the said foreign sale contracts to the I. D. C. it cannot be said that the claimant fulfilled its obligations under the agreement. This fact certainly has a bearing on the question as to whether or not damages can be awarded in this case under that circumstance. As the supply of the articles mentioned in the agreement was for the purpose of export to the foreign countries, it is difficult to say that the said failure was of no consequence or effect. In view of the specific provision in the agreement to this effect as mentioned in the award, it is difficult to hold that the aforesaid condition in the agreement was a surplusage or was a bare formality of no effect or consequence. Moreover, the very fact that the arbitrator settled the said issues for adjudication of the matter shows that the facts relevant for and requiring consideration of these issues were required for the proper adjudication and assessment of the questions involved in the arbitration proceeding. Further, as the award is a non-speaking award and all the facts relevant for the consideration and assessment of this question are not stated in the award, and in view of all that is stated above, it cannot be said by one stroke of pen that assessment of the relevant questions involved in the arbitration proceeding and the quantum of damages did not at all depend on the failure of the claimant to send the said contracts to the I. D. C., or that the above inconsistent findings of the arbitrator did not affect his just and fair decision on the matter. Moreover, the arbitrator has not said in the award that the above failure on the part of the claimant was of no consequence or effect. On the above considerations, I am of the opinion that the inconsistency pointed out above is not a trifling or inconsequential matter, and that in the facts of the case it cannot also be said that the said inconsistency is of no consequence or effect. In K. P. Poulose's case (AIR 1975 SC 1259) it has been held that legal misconduct is complete if the arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding and that under Section 30(a) an award can be set aside when an arbitrator has misconducted himself or the proceedings. In view of the above inconsistency on the face of the award it has to be held that the arbitrator has misconducted the proceeding, and hence the award has to be set aside and quashed.
17. In the result, therefore, the impugned order dated 9-3-1979 passed by the court below and the award given by the arbitrator in this case are set aside. All the records pertaining to the arbitration proceeding be sent back to the arbitrator very soon. The arbitrator, after giving an opportunity of hearing to both parties, will give a fresh award keeping in view the findings and observations made above.
18. The appeal is accordingly allowed. In the circumstances of the case parties to bear their respective costs of this Court