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Regional Provident Fund Commissioner Vs. Hind Builders - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberMisc. Appeal No. 151 of 1982
Judge
Reported inAIR1985Ori103; 1985(I)OLR109
ActsArbitration Act, 1940 - Sections 13 and 30; Code of Civil Procedure (CPC) , 1908 - Sections 100 - Order 14
AppellantRegional Provident Fund Commissioner
RespondentHind Builders
Appellant AdvocateS.P. Misra, ;D. Das, ;S.K. Choudhury, ;S. Latif and ;K.C. Mohanty, Advs.
Respondent AdvocateR.K. Roth and ;B.K. Nayak, Advs.
DispositionAppeal dismissed
Cases ReferredState of Orissa v. Purusottam Pradhan. The
Excerpt:
.....glt 246, are not good law]. - law is well settled that an arbitrator has got the power to give a non-reasoned award which cannot also be questioned by court unless there is some error apparent on the face of it. the award is not available to be separated and a portion of it cannot be found to be bad in law......no. 78 of 1980, as the learned judge found that dispute did exist between the parties. both the parties submitted to arbitration. the arbitrator passed a non-speaking lump sum award for a sum of rs. 2,34,221/- with interest at the rate of 12 per cent per annum with effect from may, 5, 1981 after perusing the statements and documents put in by both the parties and hearing them. objections were raised by the appellant before the learned subordinate judge who did not accept the objections because the arbitrator had given a lump sum unreasoned award and there was no error apparent on the face of the award. the award was accordingly made a rule of the court and a decree was passed accordingly without allowing future interest from the date of the decree till realisation of the amount.....
Judgment:

B.K. Behera, J.

1. The claimant --respondent entered into an agreement with the appellant on February 9, 1973 for construction of the office building and staff quarters for the office of the Regional Provident Fund Commissioner at Bhubaneswar. As dispute arose between the parties, the matter was referred to Mr. Justice. H. Mohapatra, a retired Judge, as the sole arbitrator, by the learned Subordinate Judge, Bhubaneswar, in Miscellaneous Case No. 78 of 1980, as the learned Judge found that dispute did exist between the parties. Both the parties submitted to arbitration. The arbitrator passed a non-speaking lump sum award for a sum of Rs. 2,34,221/- with interest at the rate of 12 per cent per annum with effect from May, 5, 1981 after perusing the statements and documents put in by both the parties and hearing them. Objections were raised by the appellant before the learned Subordinate Judge who did not accept the objections because the arbitrator had given a lump sum unreasoned award and there was no error apparent on the face of the award. The award was accordingly made a rule of the Court and a decree was passed accordingly without allowing future interest from the date of the decree till realisation of the amount awarded if paid within three months and if not, it was ordered that the principal amount would carry future interest at the rate of 6 per cent per annum from the date of the decree till the date of realisation.

2. The appellant challenges the award and the decree passed thereon. It has been urged on behalf of the appellant that the arbitrator had not referred to the agreement between the parties and had allowed some claims which were not arbitrable. The arbitrator, it is submitted, by passing a non-speaking award, shut up the valuable legal right of the appellant to know which claims and rights of the claimant-respondent had been adjudicated and had entitled him to an award. It has also been submitted that issue had not been framed by the arbitrator with regard to the dispute involved and the arbitrator had not followed the principles of natural justice and had thus misconducted himself. The award of interest by the arbitrator has also been challenged in this Court. The learned counsel for the respondent has, however, submitted that as there is no error apparent on the face of the award which is a non-reasoned one and the arbitrator has passed the award following the principles of natural justice after taking into consideration the claims and counter claims and the documents on which reliance had been placed by both the parties and after hearing them, the award cannot be called in question. It has also been submitted that the arbitrator did have jurisdiction to make a non-reasoned and non-speaking lump sum award and no grievance could be made because of non-framing of issues, as at no stage during the proceedings before the arbitrator, the appellant had made an application or verbal submission for framing issues and to decide the issues with reference to the materials placed before him.

3. A number of objections had been raised before the learned Subordinate Judge referred to in the judgment passed by him. After considering the contentions raised before him by both the sides, the learned Subordinate Judge observed and held :

'A close reading of the award given by the learned Arbitrator will show that he has allowed a lump sum amount of Rs. 2,34,221/-to be paid to the plaintiff-claimant without assigning any reasons. In the award, he has further stated that in awarding the above amount he considered the statement of claims, counter statement including counter claim, rejoinder to counter statement and the documents filed by the parties and the award was given after considering the argument advanced by the learned Advocates for both the parties. It cannot, therefore, be said that there is any error apparent on the face of the award to set it aside. Law is well settled that an Arbitrator has got the power to give a non-reasoned award which cannot also be questioned by Court unless there is some error apparent on the face of it. Similarly, under the law, the Arbitrator has got the power to grant interest in deserving cases and in the instant case the learned Arbitrator has allowed interest at 12 per cent from 5-5-81 and in view of the fact that the transactions were commercial in nature 12 per cent interest cannot be said to be high. Accordingly, I find no substance in the objections raised on behalf of the defendant as mentioned above and the award is, therefore, made as the rule of the Court.'

4. As held by the Supreme Court in AIR 1981 SC 479 Smt. Rukmanibai Gupta v. The Collector, Jabalpur to which reference has been made by the learned counsel for the appellant, when a matter is submitted to a person's decision, the intention of the parties is that the arbitrator should hold an inquiry in the nature of a judicial inquiry and hear the respective cases and decide upon the evidence laid before him. In the instant case, however, no conclusion can be reached in favour of the appellant in the absence of materials showing that these principles; had not been followed by the arbitrator and that he had not followed the principles of natural justice before making the award.

5. In (1982) 54 Cut LT 214 : (AIR 1982 Orissa 277) State of Orissa. v. Gangaram Chapoli, this Court has held that the provision made in Order 14 of the Civil P.C. for framing issues has application to arbitration proceedings. But as submitted on behalf of the respondent, no submission -- verbal or written -- had been made by the appellant before the arbitrator for framing issues. Both the parties submitted to arbitration and put in their respective cases and documents on which reliance had been placed by them. No prejudice can be assumed to have been caused to the appellant in this regard. As a matter of fact, no such objection had also been raised before the learned Subordinate Judge when the award was considered and ultimately made a rule of the Court. As held by this Court in AIR 1983 Orissa 170 State of Orissa v. Kirtan Charan Mohanty, an objection to the award not raised by the party before the Judge making it a rule of the Court should not be entertained at the appellate stage as that would amount to a denial of justice.

6. The arbitrator has given a lump sum award without giving reasons therefor. This is permissible under the law. See (1981) 51 Cut LT 333 State of Orissa v. Rama Chandra Sahu and (1982) 54 Cut LT 6 State of Orissa v. Pate! Engineering Co. Ltd. The jurisdiction of a Court in respect of setting aside an award is limited to the grounds enumerated in Section 30 of the Indian Arbitration Act. See AIR 1982 Orissa 275 State of Orissa v. J. N. Choudhury.

7. As the award is a non-reasoned and non-speaking one, the details of the claims cannot be called in question with reference to the materials placed before the arbitrator who is not bound to give reasons for making an award. When an erroneous legal proposition forms the basis of the award, then only it can be said to be erroneous. A Court is not to sit in appeal over the conclusion of the arbitrator by re-examining the materials considered by him. The arbitrator can entertain and decide the dispute regarding additional and extra work originated from the work taken up by the claimant.

8. The award of an arbitrator cannot be set aside unless there is an error of law apparent on the face of the record or unless a contrary intention is disclosed by the agreement. Wrong or right, the award is binding, if it has been reached fairly after giving adequate opportunity to the parties to place their cases. See AIR 1963 SC 1685 Union of India v. A. L. Rallia Ram. This principle has been followed by this Court in (1981) 52 Cut LT 369 : (AIR 1981 Orissa 188) Union of India v. Builders Union. In the case of State of Orissa v. Gokulchandra Kanungo (1981) 52 Cut LT 416 : (AIR 1981 Orissa 160), a Division Bench of this Court has (laid down) as to what would amount to an error of law on the face of the award. An error of law on the face of the award means that one can find in the award or the 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 one can then say is erroneous. The Court has no jurisdiction to investigate into the merits of the case and examine the materials on the record for the purpose of finding out as to whether the arbitrator has committed an error of law. In this connection, reference be made to the principles laid down in AIR 1975 SC 230, N. Chellappan v. Secretary. Kerala State Electricity Board, AIR 1979 Orissa 39, State of Orissa v. U. N. Samantaray, AIR 1980 Orissa 76, Executive Engineer Deburi Expressway Division v. Hemalata Singh, (1981) 52 Cut LT 37 : (AIR 1981 Orissa 124), State of Orissa v. B. N. Agarwala and (1981) 52 Cut. LT. 260 : (AIR 1981 Orissa 172), Executive Engineer. R. E Division v. J. C Budharaj.

9. When the award is a non-speaking one and the reference is of a general nature, the Court cannot review the question referring to the documents filed before the arbitrator. The disputes as to the construction of a contract and as to the interpretation of the arbitration clause are within the jurisdiction of the arbitrator.

10. It has been a settled principle of law that the arbitrator has jurisdiction to make an award for the additional works connected with the works taken up by, the claimant in connection with which the disputes have arisen. See (1981) 51 Cut LT 333 (supra), (1981) 52 Cut. LT 369 : (AIR 1981 Orissa 188) (supra), (1981) 52 Cut LT 416 : (AIR 1981 Orissa 160) (supra) and AIR 1982 Orissa 275 (supra). In the instant case, no reasons have been assigned by the arbitrator and lump sum amount has been awarded. The award is not available to be separated and a portion of it cannot be found to be bad in law. The Court cannot review the award and correct any mistake in the arbitrator's adjudication unless an objection to the legality of the award is apparent on the face of it. Even when an arbitrator commits a mistake either in law or on fact in determining the matters referred to him and such mistake does not appear on the face of the award or in a document attached to or incorporated in it so as to form part of it, the award cannot be called in question notwithstanding the mistake.

11. Unless the agreement prohibits grant of interest, the arbitrator does have jurisdiction to make an award in respect of interest, as held by this Court with reference to a number of decisions of the Supreme Court. See (1971) 37 Cut. LT. 937, State of Orissa v. Govinda Choudhury, AIR 1980 Orissa 74, Executive Engineer, Rural Engineering Organisation, Khurda v. D. N. Senapati, (1981) 51 Cut. LT. 333 (supra), (1981) 52 Cut. LT 63 : (AIR 1981 Orissa 166), State of Orissa v. Consolidated Construction Company (Engineers & Contractors), (1981) 52 Cut. LT 369 : (AIR 1981 Orissa 188) (supra), (1981) 52 Cut. LT 416 : (AIR 1981 Orissa 160) (supra), (1982) 54 Cut. LT 6 (supra), AIR 1982 Orissa 275 (supra) and AIR 1983 Orissa 287, State of Orissa v. Purusottam Pradhan. The award and the decree passed thereon cannot be challenged on this account.

12. In the result, the appeal fails and is dismissed. The parties are to bear their own costs of this appeal.


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