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Union of India (Uoi) Vs. American Stores - Court Judgment

LegalCrystal Citation
CourtPunjab and Haryana High Court
Decided On
Case NumberF.A.O. No. 64-D of 1954
Reported inAIR1958P& H60
ActsArbitration Act, 1940 - Sections 16, 16(1) and 30
AppellantUnion of India (Uoi)
RespondentAmerican Stores
Appellant Advocate Bishambar Dayal, Standing Counsel
Respondent Advocate Hans Raj Sawhney, Adv.
DispositionAppeal dismissed
Cases ReferredHolgate v. Killick
.....judgment or order of a single judge to a division bench notwithstanding anything contained in the letters patent. the letters patent which provides for further appeal to a division bench remains intact, but the right to prefer a further appeal is taken away even in respect of the matters arising under the special enactments or other instruments having the force of law be it against original/appellate decree or order heard and decided by a single judge. it has to be kept in mind that the special statute only provide for an appeal to the high court. it has not made any provision for filing appeal to a division bench against the judgment or decree or order of a single judge. no letters patent appeal shall lie against a judgment/order passed by a single judge in an appeal arising out of a..........both the matters and decided the disputes by separate awards given on the 28th of august 1952. the umpire awarded rs. 6,05,215 to the american stores and rejected the counter-claim of the government. the umpire sent an intimation of the awards to the counsel for both parties. it is not necessary to refer to the proceedings relating to the government's counter-claim as it is not before me and the government has not filed an appeal against the order of the trial court making that award a rule of the court which allowed costs to the firm.2. on the 14th of october, 1952, the american stores made an application in court under section 14 of the arbitration act for a direction to the umpire to file the award in court with all the documents and record of proceedings and thereafter to make it a.....

Bishan Narain, J.

1. In November 1947 the Government of India invited tenders for the purchase of certain American surplus foodstuffs which were lying at three depots viz. Northbrook Depot, Lybion Depot and Gangalbuoy Depot. The American Stores, a partnership firm, offered Rs. 4,17,000/15/3 for the entire stock on the basis of certain valuations and calculations and this tender was accepted by the Government on the 22nd of December, 1047. Possession of the stock was delivered to the firm in due course.

The firm removed certain quantities of these goods, but then the Medical Authorities. Calcutta, intervened and declared certain stores to be unfit for human consumption. Thereupon disputes arose between the purchasers and 'the Government and the parties by document dated the 6th of July, 1950 entered into an arbitration agreement. Under the agreement the Government appointed Bakhshi Shiv Singh and the firm appoint' ed Raizada Narsingh Das Bali as arbitrators.

The latter, however, refused to act and Indar Singh was appointed an arbitrator in his place by the firm. Proceedings were taken by the arbitrators and the firm claimed Rs. 6,13,817 as damages. The arbitrators failed to agree and the case was forwarded on the 24th of September, 1951 to Diwan Hukam Chand a retired Magistrate, who had been previously appointed as an umpire by the arbitrators. Thereafter the Government counter-claimed rent for godowns and for this claim Diwan HuKam Chand was appointed as the sole arbitrator by the parties.

The umpire entered into reference on both the matters and decided the disputes by separate awards given on the 28th of August 1952. The umpire awarded Rs. 6,05,215 to the American Stores and rejected the counter-claim of the Government. The umpire sent an intimation of the awards to the counsel for both parties. It is not necessary to refer to the proceedings relating to the Government's counter-claim as it is not before me and the Government has not filed an appeal against the order of the trial Court making that award a rule of the Court which allowed costs to the firm.

2. On the 14th of October, 1952, the American Stores made an application in Court under Section 14 of the Arbitration Act for a direction to the umpire to file the award in Court with all the documents and record of proceedings and thereafter to make it a rule of the Court. After the award etc. had been filed in Court, the Government filed objections to the award inter alia on the grounds that (1) the umpire was guilty of misconduct as he had been approached by the claimants, (2) the umpire had not produced the real award in Court which he had already sent to the Government, and (3) in any case the award is against law on the face of it.

The other objections raised by the Government before the trial Court were not pressed and were also ignored in this Court. The trial Court' overruled all these objections and ordered the award to be made a rule of the Court. The Government has filed' this appeal in this Court to, get the award set aside.

3. The learned counsel for the Governmentfrankly conceded before me that there is no 'evi-dence in support of issue No. 2 which relates tothe misconduct of the umpire. The Governmenthad only questioned the umpire on this matterwho denied that he had been approached by therespondent firm or its partners. This issue wastherefore rightly decided against the Governmentby the trial Court.

4. The learned counsel for the Government strenuously urged before me that the umpire had not produced the real award in Court and that another document had been produced in Court which was not the real award. This objection arises in the following circumstances. The umpire has filed a short award bearing a stamp of Rs. 75/-(Exhibit Order 2). It is dated the 28th of August, 1952.

It is proved on the record that on the 2nd of September, 1952, the umpire sent a letter (Exhibit Order3) to the Government which was signed on the 28th of August, 1952, and therewith was enclosed a document dated the 28th August, 1952 (Exhibit Order 1) which runs into 82 typed pages and discusses the merits of the case in detail. The argument is that Exhibit Order l is the real award and that after the umpire had signed it he had become functus officio and could not give another award (Exhibit Order 2) which he has filed in Court. It is, therefore, necessary to determine whether the umpire's real award was the document Exhibit Order 1 or the document, Exhibit Order 2.

5. Now, the covering letter recites the fact that he had been appointed an umpire in one ' case and the sole arbitrator in Government's counter-claim and gives the amounts that he had awarded to the firm. The letter then proceeds to say.

'These awards were formal and short. Besides I am sending informally my findings in each of the two cases, covering 82 pages and four pages respectively. I know I was not bound to write these lengthy findings, but still I have done it, as I felt I was duty bound to bring to the notice of the authorities the misconduct of some of the Disposal Officers who made these awards inevitable against the Union of India, so that if you think fit you might make enquiries into the whole affairs.'

It is clear that this letter was signed by the umpire on the 28th of August, 1952, i.e., on the date that the stamped award was given and on that date the umpire had written that the formal award was a short one and that the accompanying document was being sent to enable the Government to hold an inquiry into the conduct of the Disposal Officers. Therefore, as far as this letter is concerned, it is clear that the umpire intended the short award to be the real and formal award. Moreover, it is admitted in the parties' pleadings that on making the award the umpire had informed their counsel that the award had been made in accordance with Section 14(1) of the Act.

It is not suggested that in this intimation there was any reference that the award was being or was intended to be forwarded to the Government for necessary action,

6. It has, however, been urged on behalf of the Government that there is intrinsic evidence in Exhibit Order 1 which shows that It was the real award. I have carefully gone through this document. It is headed as 'order'. It deals with the present claim and discusses the pleadings of the parties, the issues and evidence in this case. Separate findings are given on the 23 issues which had been framed by the arbitrators and also reasons for his conclusions on these issues. The document then say -

'Thus the claimant is entitled to Rs. 5,14,4707-on account of North Brook Depot and Rs. 90.745/-on account of Lybian Depot; total Rs. 6,05,215/-as compensation and I give award of this amount.'

It is signed as an umpire and is dated 28th August, 1952. If this was all and the document stood by itself without any collateral document, then it could be said with justification that it was the umpire's award. There are, however, other circumstances which militate against this conclusion. At page 5 of this document (Exhibit Order 1) occurs a paragraph which reads -

'The claimant has laid his entire case in his petition and the respondent in the written statement. I have separately given my award as an Umpire. At the same time I consider it my duty to briefly discuss the entire case of both the parties and give my own finding on it for the consideration of the Government for any action they deem fit to take in it and send the file to the Director of Administration and Coordination for the purpose.'

It is not the Government's case that this paragraph was a subsequent interpolation in the document, nor does it so appear to the naked eye. This paragraph is in complete harmony with the covering letter and is in consonance with the umpire's conduct in not stamping it as an award and also in sending it to the Government alone. The umpire has stated in Court that he had purchased the stamp paper on the 27th of August, 1952, and that by that time the document, Exhibit Order 1, was completed, but he is definite in his cross-examination that he had signed the award, Exhibit Order 2. (the stamped document) before he had signed Exhibit Order 1, and there is no reason to disbelieve him on this point. He is a retired Magistrate and is aware of the formalities of law. He has complied with the provisions of Section 14 to the letter.

It is further clear that he did and purported to sign the award, Exhibit Order 2, as a formal award, although he signed many other documents at that time. Besides the two awards he signed two notes which were forwarded to the Government as also two letters intimating the parties' counsel that the awards had been made and signed. In these circumstances I agree with the trial Court that the document, Exhibit Order 2, is the real award and the document. Exhibit Order 1, was intended by the umpire to be detailed resume of the case with his findings to enable the Government to take any action that it considers fit and proper. This contention of the Government therefore fails and is rejected.

7. It was then argued on behalf of the Government that in any case the document, Exhibit Order 1, relates to the case and was written and signed contemporaneously with the stamp award, Exhibit Order 2, and, therefore, it should be read as part of the award. The object of this argument is that if Exhibit Order 1 is read as incorporated to Exhibit Order 2, then any conclusion in Exhibit Order 1 which is contrary to law may be held to be an error of law on the face of the award. Whether a document is actually incorporated to the award and forms part of it is a question of fact and is to be determined by the circumstances of each case.

This matter cannot be decided as a matter of law. The legal position regarding the circumstances in which an error of law can be considered to be a reason for setting aside an award is well estaolished. It held in Hodgkinson v. Fernie, (1857) 111 RR 614 (A) that the law has for many years been settled, and remains so at this day, that an arbitrator is the sole and final judge of all facts and law, and in that case William J. observed -

'the only exceptions 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 necessary anses on the tace of the award or upon some paper accompanying and forming part of the award. Though the property of this latter may very well be doubt-ed, I think it may be considered as established.'

This observation was cited with approval in Champsey Bhare & Co. v. Jivraj Balloo Spinning and Weaving Co., Ltd., AIR. 1923 PC 66 (B), by their Lordships of the Privy Council and this legal principle has been accepted by our Supreme Court also. It is therefore necessary to consider in the present case whether the document, Exhibit Order 1, accompanied and formed part of the award, Exhibit Order 2.

8. Shri Bishambar Dayal in support of his contention has strenuously relied on the decision given in Kent v. Elstob, (1802) 6 RR 520 (C), In that case the arbitrator delivered with his award a certain paper containing observations on the evidence led before him and nig reasons for making the award. Grose, J. considered that the two documents should be taken as one instrument, while Blanc, J. held that as the papers were delivered together with the award as containing reasons for coming to the conclusion, it must be taken as if those reasons were inserted in the award itself.

The present case is entirely different. The document, Exhibit Order 1, was not delivered with the award as giving reasons for the award. It was sent to the Government with the object of enabling it to take any action against its officers that it considered fit and it was not sent with the object of giving reasons for the conclusion of the umpire as far as they related to the rights of the parties in the disputed claim. It is true that this distinction is fine, but it is quite possible for an arbitrator to consider reasons which should prevail in a dispute between the parties to be irrelevant when reasons are to be given for any action to be taken against officers of one of the parties.

Moreover this judgment of 1802 has not been accepted in subsequent decisions. In Leggo v. Young, (1855-56) 100 RR 860 (D), the umpire made an award in favour of the defendants. The award was accompanied by a letter of the umpire as such. It bore the date of the award itself and it was addressed to the plaintiff and it stated that if the reference had empowered him to award costs, then he would have ordered the defendants to pay costs to the plaintiff. That case comes quite near to the present case, but the letter in that case was ignored and it was held that it did not form part of the award. The case (1802) 6 RR 520 (C), was distinguished, and then it was observed by Maule J. when referring to this matter -

'It lies at the very root of the motion, that the Court can look at the arbitrator's letter for the purpose of seeing that he was wrong in point of law. The principal case upon this subject is (1802) 6 RR 520 (C) which is sought to be shaken by the subsequent case of Doe d. Oxenden v. Cropper, (1839) 50 RR 378 (E). But Kent v. Elstob (C), was a very different case from this. There, the arbitrator delivered with his award a paper containing observations upon the evidence laid before him, and his reasons for making the award as he did. That, therefore, was a paper which subsequently formed part of the award, and was intended so to do, Here, however, there is no document delivered with the award to both the parties; but merely a letter addressed to one of them, intimating the umpire's regret that he could not give him the costs.

I do not think that is a sort of thing that should be taken notice of, or permitted to operate against the deliberate decision to which the umpire hag come. We are rather more scrupulous now than the Courts formerly were as to these , explanatory papers given out by arbitrators. One can easily conceive that as arbitrator might write to one of the parties, and express his regret that he cannot award him costs, without holding him to be pledging himself that he would have dcid-ed otherwise than he did, if he thought the authority under which he acted permitted him to do so.'

This matter again came up before the EnglishJudges in Holgate v. Killick, (1861) 126 RR 492(P). In that case the award was made on the 23rdof August, 1861 and on the same day and contemporaneously with the award the arbitrator wrotea letter to the defendants' attorney and gave itto the plaintiff's attorney to deliver it to the addressee. This letter disclosed the ground on whichthe decision in the award was given. Wilde,B. observed --

'By 'contemporaneous writing' It meant some writing attached to and forming part of the award. The question here is whether the Master's letter substantially forms part of his certificate. The affidavit does not state that the letter was delivered contemporaneously with the certificate. It was written, not so much for the purpose of giving the reasons for the conclusion at which the Master arrived as for facilitating a settlement of all disputes between the parties.'

Applying these reasons it is obvious that in the present case the umpire has written this document, Exhibit Order 1, with a view to bring the conduct of certain officers to notice of the Government and not with a view to give reasons for his conclusions relating to the dispute between the parties. For these reasons this contention of Shri Bishambar Dayal also fails and must be rejected.

9. it was conceded on behalf or the Government that if the document, Exhibit Order 1, is not to be read as incorporated in the award. Exhibit Order 3 then the award cannot be impeached as the umpire had given no reason in this award for his conclusions which can be considered to be error of law apparent on the face of the award. Indeed, there is no decision on this matter in the judgment of the trial Court as that matter was left to be decided after the other two matters discussed above had been decided.

10. The result is that this appeal fails and isdismissed with costs.

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