(1) The question is : Can the Commissioner require the arbitrator to make a speaking award if the amount awarded exceeds Rs25,000.00 Counsel for the parties agree that in clause 25 of the agreement there is no such requirement. If the arbitration clause does not provide for a speaking award, is it open to the Commissioner to make it a condition of his appointment Mr. Bansal says that the Commissioner has this power because under the clause he can either himself arbitrate upon the matter or appoint a nominee. It is contended that when he appoints a nominee he can tell him that he has to make a speaking award. He further contends that it is not open to the arbitrator to ignore this direction and to make a non-speaking award because he accepts the appointment in terms of the letter dated 13th December, 1979. If he is not willing, he ought to refuse the appointment. He cannot accept the appointment and refuse to abide by the terms. This is the contention. On this ground counsel says that the condition in the letter of appointment that the a Ward has to be a speaking award is not invalid. In any case he submits that the contractor is estopped from challenging the condition because it is a term of the appointment and he had agreed to the appointment of Sh- Mallinath Jain.
(2) HELD-IN my opinion this contention is not well founded. The Commissioner has no power to lay down such a condition as a term of the appointment of the arbitrator. It is not disputed that the appointment has to be made interms of clause 25 of the agreement. Both parties have agreed to clause 25. It is the arbitration agreement. The arbitration agreement does not provide for a speaking award. The Commissioner cannot unilaterally lay down that the award has to be a speaking award when the clause does not say so. The appointment has to be made strictly in terms of clause 25. Nothing more nothing less. The contractor is right in saying that he never agreed to this term. If the arbitration clause provides that the award has to be a speaking award by the arbitrator, no one can have any cause of complaint. But if it is super added as a term of appointment by the authority which is given the power to appoint the arbitrator under the clause, that will be illegal. The authority cannot arrogate to itself the power to lay down the terms and conditions which were not agreed to between the parties.
(3) The constitution of the arbitral tribunal, and the manner in which it is to be appointed, are primarily matters for arbitration agreement to determine. (Russel on Arbitration 19th ed. p. 130). To constitute an arbitration agreement there must be an agreement - that is to say, the parties must be ad-idem. (Russel p. 48). The arbitrator is given such powers as the parties wish. The arbitration agreement is the source of authority of the arbitrator It is the fountain-head of his jurisdiction. He derives his powers from the agreement of refernce. His authority and powers can be circumscribed and hedged with restrictions. One such restriction can be that he shall give reasons for the award. The parties by agreement can lay down this condition for the arbitrator. But one party cannot impose it of his own choice.
(4) The function of the Commissioner is to appoint an arbitrator where disputes exists. It is a power coupled with a duty. It is not given to the Commissioner to appoint or not to appoint an arbitrator as he likes. He cannot act arbitrarily or according to his whim or fancy. It is his duty to appoint an arbitrator. And if he does not do his duty the court can compel him to appoint an arbitrator. But when he appoints an arbitrator he cannot ask him to give reasons for the award because agreement of reference does not provide for it. And agreement is the foundation of a voluntary arbitration.
(5) In my opinion the arbitrator was not bound to make a speaking award when the arbitration clause did not require him to do so. The court will disregard such a condition as is imposed by one party alone. However, in the present case the award is a speaking award. The arbitrator has given reasons for his decision on each of the 5 claims put forward before him. It cannot be said that the award is a non-speaking award, however, brief the reasons may be Because it is not the requirement that the reasons must be elaborate as they are usually given by courts of law.