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Executive Engineer, Deburi Expressway Division, Kendrapara Vs. Hemalata Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberMisc. Appeal No. 172 of 1979
Judge
Reported inAIR1980Ori76; 49(1980)CLT373
ActsArbitration Act, 1940 - Sections 13 and 30
AppellantExecutive Engineer, Deburi Expressway Division, Kendrapara
RespondentHemalata Singh and ors.
Appellant AdvocateB. Nayak, Addl. Government Adv.
Respondent AdvocateR.K. Rath, Adv.
DispositionAppeal dismissed
Cases ReferredHindustan Steel Ltd. v. P. Boner
Excerpt:
.....it is abundantly clear that the jurisdiction of the court is limited in respect of setting aside an award and the ground on which an award can be set aside has been clearly explained above and there is no need to reiterate the same. when the documents have not been made part of the award, the award, cannot be set aside and the aforesaid contention of the appellant has no legs to stand, 8. in view of the aforesaid discussions, i am clearly of the opinion that the impugned award does not suffer from any error of law or fact apparent on the face of the record......assumes jurisdiction relating to appointment of arbitrator, there is no question of any joint reference. reference was already made to the earlier arbitrator and the same reference is to be decided by the arbitrator subsequently appointed. from the records of the arbitrator, it is abundantly clear that the appellant also participated in the proceeding before the arbitrator. documents were filed and arguments were also submitted by the present appellant, therefore, this contention is without any merit.5. the next limb of agrument of the appellant is that the arbitrator has allowed the rate of interest more than the rate prescribed in the agreement, this arguments is also not tenable. no document has been incorporated in the award, nor the arbitrator has referred to any portion of the.....
Judgment:

N.K. Das, J.

1. Devendranath Singh, since deceased, predecessor-in-interest of the present respondents, entered into a contract with the Executive Engineer, Deburi Expressway Division, Kendrapara for construction of the work 'Road Structure Repairs' as per F2 agreement (Ext. 5) which contained an arbitration clause for decision of disputes arising between the parties. A dispute was referred to the Chief Engineer who nominated one Mr. A.N. Nanda, Superintending Engineer to arbitrate the dispute between the parties. A petition was filed by the respondents for removal of Mr. Nanda which was registered as Misc. Case No. 58 of 1976 in the court of the Subordinate Judge, Jajpur. By order dated 6-7-1977, authority of Mr. Nanda to arbitrate was revoked and the order appointing him as arbitrator was quashed. Civil Revn. No. 203 of 1977 was preferred against the aforesaid order, but the order of revocation of the authority of Mr. Nanda was affirmed in revision. By mutual consent of both parties, one Mr. J. Behera, Superintending Engineer, Eastern Circle, Balasore was appointed by Court to act as arbitrator by order dated 14-11-1977. After hearing the parties, Mr. Behera, submitted the award on 18-1-1979. Plaintiffs-respondents filed Title Suit No. 15 of 1979 praying for pronouncing a judgment and passing a decree in terms of the award. The defendant-appellant filed objection to the acceptance of the award challenging the same on the ground of jurisdiction of the arbitrator and contending that the award is to be rejected for unilateral reference made by the contractor, the award is vitiated, inasmuch as the award contains decision on extra items and the rate of interest granted by the arbitrator was more than the rate stipulated in the agreement. The learned Subordinate Judge framed seven issues. It was held by the learned Subordinate Judge that the arbitrator was appointed with clear and categorical consent of both the parties. As both the parties suggested the common name of Mr. Behera for appointment as arbitrator, the Court with consent of the parties appointed the arbitrator and, as such, the objection of the present appellant was not tenable. All the disputes between the parties relating to the claim of the plaintiffs having been admittedly referred to the arbitrator, the latter had jurisdiction to decide the extra claims made by the plaintiffs. The interest awarded by the arbitrator was within his jurisdiction and, as such, cannot be said to be illegal. Accordingly, the suit was decreed by the learned Subordinate Judge. This appeal is directed against the aforesaid order by the Executive Engineer,

2. The learned Additional Government Advocate contends that this award is to be set aside on the following grounds E There was no joint reference to the arbitrator; there was no participation by the present appellant before the arbitrator and the arbitrator's decision is ex parte; the rates allowed by the arbitrator are more than the rates prescribed in the agreement) the award is wrong, inasmuch as the arbitrator has allowed the claim relating to extra works done by the contractor and he has wrongly allowed interest from the due date till the date of the award.

3. The Privy Council in Champsey Bhara & Co. v. Jivraj Balloo Spinning & Weaving Co. Ltd., AIR 1923 PC 66, reversing a decision of the Bombay High Court reported in AIR 1920 Bom 256, held :--

'The law has for many years been settled and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator, a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact.........The only exception to that rule are cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is now, I think firmly established viz., where the question of law necessarily arises on the face of the award or upon some paper accompanying and forming part of the award, Though the propriety of this latter may very well be doubted, I think it may be considered as established.'

Relating to the question of error of law on the face of the award, it was held :--

'An error in law on the face of the award means, in their Lordships' view, 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 that contention is and then going to the contract on which the parties' rights depend to see if that contention is sound.'

Regarding the jurisdiction of the arbitrator, it was held:--

'The question of whether an arbitrator acts within his jurisdiction is, of course, for the Court to decide, but whether the arbitrator acts within his jurisdiction or not depends solely upon the clause of reference. It is, therefore, for the Court to decide in this case whether the dispute which has arisen is a dispute covered by Clause 13 of the Articles, (This was clause in that case).' The Supreme Court in firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., AIR 1967 SC 1030, approved the aforesaid decision of the Privy Council and held that the arbitrator's award both on fact and law is final and there is no appeal from his verdict The aforesaid principle was again reiterated by the Supreme Court in Union of India v. Bungo Steel Furniture Private Ltd., AIR 1967 SC 1032. Again very same principle was emphasised by the Supreme Court in Alien Berry & Co. Pvt. Ltd v. Union of India, AIR 1971 SC 696, wherein it was held that when the parties had chosen their arbitrator, they cannot object to the award either upon the law or the facts when the award is good on the face of it and the mistake alleged is not apparent from a perusal of the award or any document appended to or incorporated in it so as to form a part of it. The Supreme Court in that case further held:--

'Before we proceed to consider these propositions, it is necessary to ascertain the scope of Section 30 of the Arbitration Act, 1940, and the principles underlying that section. The general rule in matters of arbitration awards is that where parties have agreed upon an arbitrator, thereby displacing a court of law for a domestic forum, they must accept the award as final for good or ill. In such cases the discretion of the Court either for remission or for setting aside the award will not be readily exercised and will be strictly confined to the specific grounds, set out in Sections 6 and 30, of the Act.'

So also in N. Chellappan v. Secretary, Kerala State Electricity Board, AIR 1975 SC 230, the Supreme Court emphasised as under:--

'The umpire as sole arbitrator was not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact, that is no ground for challenging the validity of the award. It is only when an erroneous proposition of law is stated in the award and which is the basis of the award, can the award be set aside or remitted on the ground of error of law apparent on the face of the record.' It was held in that case that the award was not vitiated on account of any mistake or error apparent on the face of the record. That was a case in which the question of limitation was raised by a party, but the umpire without expressly adverting to the same awarded a sum on account of certain claims made by the contractor and it was held that the award was not vitiated on account of any mistake or error apparent on the face of the record.

This Court in Narayan Panda v. State of Orissa, (1977) 43 Cut LT 633, relying on the decisions in AIR 1923 PC 66 and AIR 1967 SC 1030 (supra), has held that when parties constitute an arbitrator as a sole and final judge of any dispute between them, they bind themselves as a rule to accept the award as final and conclusive. Such an award is not ordinarily liable to be set aside on the ground that either on facts or in law it is erroneous. The award can, of course, be corrected, modified or set aside only under the limited scope of the provisions made under Sections 15 and 30 of the Act. Mistakes, if any, in the award can be corrected only if the same are evident on the face of the award or upon some paper accompanying and forming part of the award.In the case of State of Orissa v. R. S. Das, (1977) 44 Cut LT 666, this Court has also reiterated the same position.

This Court also in Indrajit Singh v. Mirza Jaliluddin Baig, AIR 1979 Orissa 196, has observed:--

'It is only inherent lack of jurisdiction or illegality of the contract embodying arbitration clause that could invalidate the award and irregularities in procedure if acquiesced in without demur would preclude a party both from challenging the appointment of the arbitration and passing of the award at a later stage when it finds that the award is not convenient for it.'

From the decision of the Supreme Court as well as this court, it is abundantly clear that the Jurisdiction of the Court is limited in respect of setting aside an award and the ground on which an award can be set aside has been clearly explained above and there is no need to reiterate the same. On an earlier occasion, I have also enumerated the aforesaid position at length in para 7 of the judgment in State of Orissa v. U. N. Samantray, AIR 1979 Orissa 39,

4. It is contended on behalf of the appellant that the award is to be set aside because there was no joint reference and the arbitrator heard ex parta since the appellant did not participate in the arbitration.

This is a case in which one arbitrator had been appointed by the Court and he was removed by the Court. Thereafter, the Court appointed another arbitrator. There is no question of any joint reference to be made to the arbitrator. After the Court assumes jurisdiction relating to appointment of arbitrator, there is no question of any joint reference. Reference was already made to the earlier arbitrator and the same reference is to be decided by the arbitrator subsequently appointed. From the records of the arbitrator, it is abundantly clear that the appellant also participated in the proceeding before the arbitrator. Documents were filed and arguments were also submitted by the present appellant, Therefore, this contention is without any merit.

5. The next limb of agrument of the appellant is that the arbitrator has allowed the rate of interest more than the rate prescribed in the agreement, This arguments is also not tenable. No document has been incorporated in the award, nor the arbitrator has referred to any portion of the agreement in the award. In the case of Alien Berry & Co., referred to above, the Supreme Court has held:--

'The test is does the arbitrator come to a finding on the wording of the contract? If he does, he can be said to have impliedly incorporated the contract or a clause in it whichever be the case. But a mere general reference to the contract in the award is not to be held as incorporating it. The principle of reading contracts or other documents into the award is not to be encouraged or extended'.

Also in the case of N. Chellappan, referred to above, it has been held that the Court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence for the purpose of finding out whether or not the arbitrator has committed any error of law. This Court has also expressed the same view in AIR 1979 Orissa 39, referred to above.

In view of the aforesaid decisions, this contention of the appellant is without any merit.

6. It is contended on behalf of the appellant that the award is vitiated, inasmuch as the arbitrator has awarded interest from the due date till the date of the award. In the case of the State of Madhya Pradesh v. Saith and Skelton (P) Ltd., AIR 1972 SC 1507, it has been made clear that where all the disputes including a claim for payment of the amount with interest is referred to the arbitrator, the arbitrator can also award interest during the pendency of the arbitration proceeding.

This Court also in the aforesaid decision reported in AIR 1979 Orissa 39, held that in view of Section 29 of the Arbitration Act it was within the jurisdiction ol the arbitrator to award pendente lite and future interest till the date of the decree. For the aforesaid decision, this Court relied on AIR 1967 SC 1032, 1970 SCD 530, (1974) 2 Cut WR 917 and AIR 1978 NOC 294 : 46 Cut LT 171.

The same view has also been expressed by this Court in Executive Engineer Rural Engineering Organisation, Khurda v. D. N. Senapati, (1979) 1 Cut WR 365: (AIR 1980 Orissa 74). A Division Bench of this Court in Hindustan Steel Ltd. v. P. Boner ILR (1973) Cut 1218, has held that the arbitrator has power to award interest when it is an implied term of reference and in the absence of prohibition in the agreement interest may be awarded from the due date till the date of award. According to the consistent view of the Supreme Court and of this Court, referred to above, the award allowing interest is not at all vitiated,

7. It is further contended on behalf of the appellant that the award is vitiated as the arbitrator has allowed extra items claimed by the contractor. I have already held that the agreement has not been made a part of the award, nor is, the award based on the terms of the agreement. The entire dispute was referred to the arbitrator and in view of the findings made above about the limited jurisdiction of the Court, the award cannot be set aside, in absence of an error of law apparent on the face of the record. When the documents have not been made part of the award, the award, cannot be set aside and the aforesaid contention of the appellant has no legs to stand,

8. In view of the aforesaid discussions, I am clearly of the opinion that the impugned award does not suffer from any error of law or fact apparent on the face of the record. As the parties chose to abide by the decision of the arbitrator, the arbitrator had full power to give his award in respect of all disputes arising under the contract and the award cannot be held to be without jurisdiction. Consequently, the decision of the trial court is affirmed,

9. The appeal is dismisseed with costs, Hearing fee is assessed at Rs. 100/-.


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