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State of Orissa Vs. Ganeshdas Kaluram Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberMisc. Appeal No. 116 of 1978
Judge
Reported inAIR1981Ori148; 51(1981)CLT469
ActsArbitration Act, 1940 - Sections 13, 30 and 39
AppellantState of Orissa
RespondentGaneshdas Kaluram Pvt. Ltd.
Appellant AdvocateAddl. Govt. Adv.
Respondent AdvocateD.P. Sahoo and ;Pradip Kumar Mohanty, Advs.
DispositionAppeal partly allowed
Cases ReferredIn Sherbanubai Jafferbhoy v. Hosein
Excerpt:
.....approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - 2. the appellant contends that the order of the arbitrators for refund of penalties and payment of detention charges of paddy as well as interest onthe capital blocked is wrong......the terms of the agreement and the award is vitiated inasmuch as the arbitrators allowed some ex gratia payment to the plaintiff. objections filed by the defendant were overlooked by the trial court and hence this appeal.2. the appellant contends that the order of the arbitrators for refund of penalties and payment of detention charges of paddy as well as interest onthe capital blocked is wrong. these were undoubtedly within the scope of the arbitrators. this appellant has come up in appeal to set aside the award of the arbitrators and i do not find any reason to interfere with the decision of the arbitrators on these points.3. the next point urged by the appellant is that the claim of the plaintiff for extra payment towards sewing, weighing, bagging and handling charges has been found.....
Judgment:

N.K. Das, J.

1. The defendant is the appellant. Plaintiff was the purchasing agent under the defendant during the kharif year 1953-54. Since dispute arose between the parties regarding payments, the matter was referred to three Arbitrators. The Arbitrators after hearing the parties have signed the award and gave notice for signing the award to both the parties. Plaintiff approached the Court for directing the arbitrators to file the award. The defendant filed objection to the award on the ground that the Arbitrators misconducted themselves and they have gone beyond the terms of the agreement and the award is vitiated inasmuch as the arbitrators allowed some ex gratia payment to the plaintiff. Objections filed by the defendant were overlooked by the trial Court and hence this appeal.

2. The appellant contends that the order of the arbitrators for refund of penalties and payment of detention charges of paddy as well as interest onthe capital blocked is wrong. These were undoubtedly within the scope of the arbitrators. This appellant has come up in appeal to set aside the award of the arbitrators and I do not find any reason to interfere with the decision of the arbitrators on these points.

3. The next point urged by the appellant is that the claim of the plaintiff for extra payment towards sewing, weighing, bagging and handling charges has been found by the arbitrators not tenable as the same is not covered by the terms of the agreement, but the arbitrators have awarded an ex gratia amount of Rs. 2,000.00 on that head. The arbitrators have mentioned in the award that in the agreement deed there is no provision that Government would compensate the agent in the event of any loss and, as such, no relief is available to the first party (plaintiff) under the agreement for the loss they have sustained. But in spite of that an ex gratia amount has been awarded. But it is contended that the arbitrators have no jurisdiction to award ex gratia payment. It has been held in Dewan Singh v. Champat Singh, AIR 1970 SC 967, that it is normally an implied term of an arbitration agreement that the arbitrators must decide the dispute in accordance with the ordinary law. That rule can be departed from only if specifically provided for in the submission.

In Sherbanubai Jafferbhoy v. Hosein-bhoy Abdoolabhoy, AIR 1948 Bom 292, a Division Bench of the Bombay High Court has held as follows (at pp. 294 & 295):--

'Now, I cannot understand how any Court or any judicial tribunal can award any sum to any party ex gratia. Ex gratia can only mean giving to a party something to which he is not entitled as a matter of legal right, and a Court of law does not act on sentiments, nor has it the power to dole out charity. It can only give relief to parties provided those reliefs are based on legal rights established before the Court. It is true that in a sense an arbitrator is not circumscribed in the same manner as a Court of law is. But when a Court of law refers a matter to an arbitrator it substitutes a domestic forum in place of itself. But that domestic forum has got to act judicially. There can be no doubt that arbitrators perform judicial functions and they must observe the fundamental rules which govern judicial proceedings. What a Court of law cannot do judicially an arbitrator also cannot do. It is common knowledge that a party very often agrees to make a payment to the other party ex gratia. But it is the party which makes the ex gratia payment, never the Court, and the Court can have no jurisdiction to order a party to make a payment when the other party has no legal right to receive the payment.'

4. It would thus appear that ex gratia is always on the consent of the parties and in the instant case the arbitrators have already held that there is no provision in the agreement for such a claim by the respondent. But in spite of that ex gratia payment has been awarded. The reasons given by the arbitrators for awarding ex gratia payment are not tenable.

5. In the result, the appeal is allowed in part and the finding of the arbitrators awarding ex gratia payment of Rs. 2,000.00 is set aside. The other decisions in the award are upheld. In the circumstances, there will be no order as to costs.


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