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Natwar Lal Shamal Das and Co. Vs. Minerals and Metals Trading Corporation of India - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberSuit Nos. 810A, 811A, 812A, 813A and 814A of 1978
Judge
Reported inAIR1982Delhi44; 1982(3)DRJ23
ActsArbitration Act, 1940 - Sections 20
AppellantNatwar Lal Shamal Das and Co.
RespondentMinerals and Metals Trading Corporation of India
Cases ReferredUnion of India v. Bashashar Nath
Excerpt:
.....be set aside when an erroneous preposition of law is stated in the award which is the basis of the award. thy arbitrator cannot go beyond the scope of reference. arbitrator has power to award interest. a claim for interest is part of the dispute and a difference between the parties. a party can claim interest before the arbitrator and is not debarred if he has not asked for it in the petition under section 20. - - (claimants). the case of the claimants was that the corporation failed to take delivery of managese are within the original delivery period or the extended period. it was contended that (1) these awards were based no evidence (2) that the arbitrator has referred to the claim, w, s' and the evidence in the awards and, thereforee, it should be held that these are speaking..........that the arbitrator is not bound to give a separate award for each claim. he can give a lump sum award his award on both fact and law is final and there is no appeal from his verdict. the court cannot review his award and correct any mislake in his adjudication unless objection to the legality of award is apparent on the face of it. when the arbitrator has given no reason for his award, nor is there any legal proposition as basis of award, the contention that there are errors of law on the face of the award must be rejected. 1923 p.c. 66, referred to). as the parties choose their own arbitrator they cannot, when the award is good on the face of it, object to the decision either upon the law or the facts. thereforee, even when an arbitrator commits a mistake either in law or in fact in.....
Judgment:

(1) The respondent (corporation) entered into five contracts with the claimants M/s Natwar Lal Shamal Dass and Co. (claimants). The case of the claimants was that the corporation failed to take delivery of managese are within the original delivery period or the extended period. They alleged that they sustained loss and damages and were entitled to reimbursement. Dispute arose between the parties. There was an arbitration clause in the purchase contracts. The claimants made applications to this court under Section 20 of the Act in 1975, and asked for a reference of the disputes and the differences between the parties to an arbitrator to be appointed by the court. A learned Single Judge of this court referred the disputes to the sole arbitrator Sh. Chopra. The arbitrator gave five awards who sent those awards to this court. The respondents have filed objections under section 30/33 of the Act for setting aside those awards. It was contended that (1) these awards were based no evidence (2) that the arbitrator has referred to the claim, w, s' and the evidence in the awards and, thereforee, it should be held that these are speaking awards and thereforee the evidence before the arbitrator can be examined by the court, (3) the award is vitiated because the arbitrator did not observe the law of limitation and awarded sums in respect of time barred claims, (4) the awards are bad and liable to set aside because they were beyond the scope of reference.

(2) Held that: 1. If an award is non-speaking award the court cannot say that the arbitrator's decision is based on good evidence or insufficient evidence or no evidence at all. In these cases it is not correct to say that the arbitrator's decision is based on no evidence. There was evidence before him and on that evidence he was entitled to find as he did in favor of the claimant . Of the quality and sufficiency of that evidence the court cannot be ajudge. It is for the arbitrator to weigh the evidence adduced by the parties. He has not to give any reason why he has accepted the claim of a party. Following a division bench judgment of this court in Union of India v. Bashashar Nath (FAO(OS) 65/63 decided on 21-5-80, the learned Judge after seeing the evidence on record came to the conclusion that there was evidence before the arbitrator on which he could find in favor of the claimants. It was thereforee held that these awards were non-speaking award and the Corporation could not assail them on the ground of no evidence.

(3) Disagreeing with the contention of the counsel for the Corporation that the arbitrator has referred to the claim, written statement, rejoinder and evidence in the award and thereforee, it should be held that these are speaking awards and the evidence before the arbitrator can be examined by the court, it was held that a mere general reference to the pleadings of the parties and the evidence does not mean that the arbitrator has invited the court to look into the evidence before him. He has not said that on the evidence of such and such witness or on the clause of such and such document he has come to such and such conclusion 1967 Sc 1032. If the arbitrator says this it can be said that he has incorporated the documents or the evidence of the witness in the award.

(4) It is well settled that the arbitrator is not bound to give a separate award for each claim. He can give a lump sum award His award on both fact and law is final and there is no appeal from his verdict. The court cannot review his award and correct any mislake in his adjudication unless objection to the legality of award is apparent on the face of it. When the arbitrator has given no reason for his award, nor is there any legal proposition as basis of award, the contention that there are errors of law on the face of the award must be rejected. 1923 P.C. 66, referred to). As the parties choose their own arbitrator they cannot, when the award is good on the face of it, object to the decision either upon the law or the facts. thereforee, even when an arbitrator commits a mistake either in law or in fact in determining the matter referred to him but such mislake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted not set aside notwithstanding the mistake. 1971 Sc 696 referred to). In a proceeding to set aside the award the court cannot sit in appeal over the conclusion of the arbitrator by re-examining or re-apparaising the evidence considered by the arbitrator and hold that the conclusion reached by the arbitrator is wrong 1971 Sc 164.

(5) Dealing with the question of limitation, it was held that the awards are non-speaking award and the arbitrator has nowhere discussed the question of limitation. The award cannot be said to be vitiated because there is no mistake or error apparent on the face of the award. There is no question of law of limitation which can be said to be apparent on the face of the award. Nor is there any erroneous proposition of law involved in the award.

(6) Held further that a party can always claim interest before the arbitrator. If he has not asked for overdue interest in the petition u/s 20 it does not mean that he is debarred from claiming interest before the arbitrator. The arbitrator has' the power to award interest. It is an implied term of the reference that the arbitrator will decide the dispute according to existing law and give such relief with regard to interest as a court could give if it decided the dispute. All matters in controversy were referred to the arbitrator and interest would be a matter in difference.

(7) Held that the order of reference defines the limits of the authority and jurisdiction of the arbitrator. The arbitrator's authority has a source in the order of reference. He cannot traverse beyond the reference made by the court. If he does so he acts without jurisdiction. The arbitrator has necessarily to restrict his award only to the claim as put forward before the court in section 20 proceedings 1977 Sc 2014. Considering the facts of awards in cases No. 810-A, 812-A, 813-A and 814-A, it was held that the awards in these cases are good and ought to stand. But in so far as award in 811-A was concerned it was held that the arbitrator had exceeded his jurisdiction in embarking on the claim that was made for the first time before him by the claimants. There is an error apparent on the face of the award. On this ground that award was set aside.

(8) There can be no acquiescence in arbitration proceedings which are clearly beyond the court's order of reference. A party is not precluded from obtaining to the award later on the ground that the award was in excess of jurisdiction and the entire proceedings were invalidate thereby. Attending and taking part in the proceedings will not cure the defect where the arbitrator lacks inherent jurisdiction.


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