Kan Singh, J.
1. This is an appeal under section 39 of the Arbitration Act and is directed against the judgment and decree of the learned District Judge, Bikaner, dated 28-10-1963, whereby the learned Judge awarded a decree of Rs. 4,26,528.90 paise in favour of the respondent and against the appellant on the basis of an award given by Shri S.P. Lal Deputy General Manager, Northern Railway on 12-2-1963 consequent to the dismissal of the objections filed by the appellant against the validity of the award The respondent has also filed a cross-objection and has prayed that interest be awarded on the amount decreed by the District Judge from the date of the decree till the realisation of the decretal amount. The main question that arises for consideration is about the validity of the award and we may briefly state the relevant facts as follows:
2. The respondent firm was engaged as contractor by the Northern Railway for the purpose of performing all the work of porterage of goods at the various railway stations and goods-sheds falling in Zone No. 2 of the Bikaner Division of the Northern Railway. The terms and conditions of the contract were contained in an indenture dated 3-4-1957. The agreement came into force from 1-4-1957 and was terminable on 31-3-1960. There were two schedules A and B appended to the agreement which provided for the rates payable to the plaintiff-respondent for the various jobs to be done by it. According to the schedules the remuneration of the contractor was to be on the basis of per thousand maunds of goods handled or per vehicle or per man hour according to the nature of the work. It was also agreed between the parties that all other handling work not specified in the agreement was to be performed by the contractor at the rates to be mutually agreed upon by the railway administration and the contractor. The procedure for payment to the contractor was that he was to prepare and submit monthly bills on the basis of the goods handled during the previous month and the actual job done was to be certified by the Station Masters concerned on submission of the bills to the Divisional Superintendent. The Accounts Office was to certify the bills after a checking and payment was ordinarily to be made within six weeks of the submission of the bills. It was, however, laid down that pending final check from the several station-returns, the contractor was to be provisionally paid to the extent of 90 per cent of the amount claimed in the bills.
The grievance of the contractor was that in disregard of the terms of the contract it was not paid an amount of Rs. 36,870 38 paise for the period from April, 1957 to August, 1958. It also felt aggrieved of certain unauthorised deductions made by the railway administration for the period from January, 1958 to September, 1958 to the tune of Rs. 1,24,715.44 paise. Then, according to it for the period from May, 1957 to December, 1958, certain bills for repacking stations and road side stations aggregating to Rupees 1,01,222.03 paise were not paid to it. Then it had a further grievance that the Station Masters had not submitted about 125 bills for the period from March, 1958 to January, 1959 to the tune of Rs. 40.000. The plaintiff respondent, according to it, made several demands to the railway administration for settlement of his claims, but it was not heard. Consequently after serving a notice under Section 80 of the Code of Civil Procedure the firm filed a suit against the Union of India for a sum of Rs. 3,17,728.81 paise in the Court of the District Judge, Bikaner on 21-9-59. However, the defendant-appellant applied under Section 34 of the Arbitration Act for staying the suit as, according to the Union of India, clause 33 of the agreement provided for arbitration in the matter of all disputes between the Union of India and the contractor. We will have occasion to refer to the arbitral clause a little later. To continue the narration, the District Judge accepted this application and stayed the suit leaving the parties free to get the matter adjudicated upon by the arbitrator provided in the agreement.
Against this decision the respondent came in appeal to this Court but eventually it withdrew the appeal and agreed to go in for arbitration. The General Manager, Northern Railway by his order dated 21-9-62 appointed Shri S. P. Lal, Senior Deputy General Manager, Northern Railway to act as Arbitrator in the dispute between the railway administration and the contractor as owing to his previous heavy engagements and pressure of official work it was not possible for him to act as an arbitrator. The order of the General Manager is available at page 411 of the paper book. Accordingly by his letter dated 29-8-62 (available at page 420 of the paper book) Shri S, P. Lal called upon both the parties to submit their respective claim petitions giving full details of the claim together with all relevant documents, He also directed that the respondent should submit a copy of the claim petition directly to the Chief Commercial Superintendent who was then to reply to the claim petition para by para Accordingly the respondent filed its claim petition on 10-9-62 (available at page 423 of the paper book). The railway administration submitted its reply and also made 3 counter claim. By his order dated 21-8-62 (available at page 521 of the paper book), after hearing both the parties, the arbitrator settled the procedure to be followed by him.
The arbitrator directed that the railway administration would frame its reply to the points raised in the petition filed by the respondent and then after the reply of the railway was received, a date shall be fixed on which the parties would argue the different issues raised point by point so that the issues may be clear. The arbitrator was to either announce his judgment or reserve it as the circumstances on each point might demand. The copy of the order was served on both the parties. On 5-12-62 it was contended by the respondent before the arbitrator that he should take up the counter claim put in by the railway administration first after listening the arguments of both the parties. The arbitrator recorded the following minutes:
'The issue raised by the applicant is that the Railway should make out a complete claim, deduct from it all the amounts they have already received and give a net balance of the amount due from the contractors to the Railway.
The Railway's contention is that the calculations of the amount would be done after some primary decisions are taken on the various issues involved and, therefore, they appear to maintain that first of all those issues should be decided. After those issues are decided, then they will work out the actual amounts on the basis of the decisions given on the various issues and the balance sheets will be struck on that basis.
Considering the arguments of both the parties it has been decided to take up the issues involved in this case before arriving at the amounts payable in respect of each claim. Parties have been informed accordingly,Parties are allowed to strike out the issues iointly and they should meet me again after lunch in case they agree on the same.'
It appears that the parties came forward with a list of issues and then the arbitrator incorporated the 10 issues in the following extract of the proceedings:
'The parties have come forward with a list of issues which they have referred for decision by the Court, The said issues are reproduced below:
(1) Whether the rate in respect of handling of TR/CR Vans under item 18 of the Rate Schedule 'A' is applicable at all the stations, if not, at what stations?
(2) Whether the petitioner is entitled to payment for handling of TR/CR Vans, both on inward as well as outward basis, at Repacking Stations as per item 18 of the Rate Schedule, if not, on what basis?
(3) Whether the petitioner is entitled to special goods rate as per item 5 of the Rate Schedule 'A' in respect of TR/CR Vans containing special goods. If not, what rate is applicable?
(4) Whether loose wool and loose cotton in boras can be classified as special goods?
(5) Whether the rate in items 3 and 4 of Schedule A1 in respect of F. P. Cotton bales is applicable to F. P. Wool bales. If not, what rate is applicable?
(6) Who is responsible for submission and preparation of bills in respect of the handling work at the stations?
(7) Whether the contract has been wrongly terminated by the Railway Administration and if so, is the petitioner entitled to renewal of the contract?
(8) Whether the petitioner is entitled to the interest as claimed?
(9) To what amount, if any, the Railway Administration is entitled to recover from the petitioner? (10) Relief.'
Then the arbitrator took up issues No. 1 for consideration and he passed the following order after hearing both the parties:
'My orders, therefore, are that handling of goods is known to all people dealing with the railway in the form of handling of good either the Officer in-charge of the operation or Contractors and mode of payment for such operations is that which is given in the Railway's interpretation. I, therefore, order that for dealing with the payment of CR/TR Vans, if at a station goods are unloaded or loaded, in such vans, the payment should be made on the maundage basis as given in items 1 to 5 of the Schedule 'A', while if the contents of CR/TR Vans are sorted out at any station and reloaded after sorting into one or more CR/TR Vans so that consignments for one destination or direction are put together, they should be paid for at the van rates i.e. item 18 of the Schedule 'A'.'
Earlier to this, while recording the arguments he noted that the parties had accepted the interpretation that the arbitrator had given. Then the arbitrator noted the arguments of the parties regarding each issue and he also noted in the proceedings whatever concessions had been made by the parties but he did not give his decision on any issue. The observations that the arbitrator had made from time to time are also contained in the proceedings.
3. After arguments had been heard issuewise, the arbitrator by his order dated 19-1-63 (available at page 661 of the paper book) called upon both the parties to furnish factual information in detail after carrying out a joint check of the actual work done during the period of the contract on Bikaner Division. The information was to be given month-by-month and broken up under certain major heads indicated in the letter. In pursuance of this letter both the parties submitted a joint statement which is available at page 668 of the paper book. Against the several entries the parties gave their own remarks where they differed. On the basis of the joint statement furnished by the parties the arbitrator prepared a summary of the joint statement and found that the net amount claimed by the contractor was Rupees 5,90,886.49 paise and the arbitrator allowed Rs. 4.26.828 90 paise disallowing the remaining amount On 12-2-63 the arbitrator pronounced his award which is available at page 673 of the paper book and is in the following terms:
'In the matter of Arbitration between M/s. J. P. Sharma and Sons, Handling Contractors, Sri Ganganagar and the Union of India represented through Northern Railway, regarding Handling Contract on Bikaner Division in respect of contract executed by the parties in respect thereof on 3rd April, 1957.
Whereas the said disputes and differences were referred to me, S. P. Lal, Senior Deputy General Manager, Northern Railway, Baroda House New Delhi and whereas, the said disputes and differences were contained to the statement* of facts and counter-state- ments produced before me during the hearing. I, S. P. Lal, having entered into the reference and having duly considered the said statements of facts before me and having heard in my office on 21-9-62, 5-12-62. 21-12-62,22-12-62 and 8-1-63 and duly considered all the arguments and having gone through all the material and papers. I hereby give my award as under:
I award that the claimant be paid a total amount of Rs, 4,26,828.90 paise (rupees four lacs twenty six thousand eight hundred and twenty eight and ninety paise only) by the Railway Administration in full and final settlement of all the claims of the parties including claim for parcel traffic, miscellaneous services and all other types of services rendered to each other.
The parties will bear their respective costs.
The stamp charges amounting to Rs. 75 shall be borne by claimant.
Honorarium for arbitration, amounting to Rs, 135 for 4 days (of more than 2 hours duration) and 1 day (of less than 2 hours) shall be payable by the Railway Administration to me and clerkage due to the Stenographer amounting to Rs 45 shall be paid by the claimant.
Dated 12th February, 1963.
Sd/- S. P. Lal,
4. This award was filed in the court of the learned District Judge. Bikaner by the arbitrator on 25-2-63. The Union of India filed objections against this award under Section 30 of the Arbitration Act on 28-3-63. It was contended that the award was bad as the arbitrator had committed misconduct in deciding the case. It was urged that the arbitrator did not apply his mind in examining the counterclaim of the railway administration, that he did not decide the matter on each issue, that the award was very vague as it did not show what the dispute was and what was the judgment of the arbitrator about the dispute, that no evidence had been taken by the arbitrator, that the arbitrator had gone beyond the terms of reference by including claims for parcel and other miscellaneous services, that the arbitrator had no jurisdiction to award an amount of Rs. 4,26,828.90 paise when in the suit the plaintiff had claimed only Rs 3,17,728.81 paise, that the arbitrator had not taken into account the sums already paid to the contractor, that the amount awarded by the arbitrator was not correct, and that the claim filed by the respondent contained extraneous matters which had not been referred to the arbitrator. The objections were contested by the respondent. The District Judge framed the following issues on 12-7-63:
'(1) Whether the award is vague and is liable to be set aside? Burden on the defendant.
(2) Whether the arbitrator has gone beyond the terms of reference and has otherwise misconducted the proceedings? If so, what shall be its effect? Burden on the defendant.
(3) Whether the arbitrator had no jurisdiction to give award for the amount exceeding the amount of the suit filed by the plaintiff and if so, what will be its effect? Burden on the defendant.
5. We may now proceed to summarise the conclusions reached by the learned District Judge regarding the above issues.
6. Regarding issue No. 1 it was contended by the Union of India that the award did not give any reason as to how and in what manner the arbitrator had reached his conclusion It was pointed out that there was no mention in the award about the counterclaim and no reason had been assigned as to why the counter-claim was disallowed. It was also urged that the award did not show as to what claims of the plaintiff-respondent were allowed and what claims were rejected. The learned District Judge observed that as no particular form of the award was prescribed by the statute, the award could be in such form as the arbitrator thought fit. The learned District Judge, however, added that all that was required in the award was that its languages should be clear and the finding be precise. The learned District Judge further noticed that the arbitrator was not bound by the technical rules of procedure like a court and, therefore, he need not record separate findings on the various points on which the parties were at issue. Nor was the arbitrator required to write a reasoned judgment. In support of his observations the learned Judge placed reliance on Raminder Singh v Mohinder Singh. MR 1940 Lah 186 which was affirmed by the Privy Council vide AIR 1944 PC 83. The learned District Judge felt that the language of the award was quite clear and the amount awarded was precise and there was no ambiguity or vagueness about it. He also repelled the contention of the Union of India that the arbitrator did not consider the claims of both the parties In this connection he referred to what was mentioned in the award and observed that it has been clearly stated therein that the arbitrator arrived at the finding after considering the statement? and counter-statements produced before him and the amount was awarded in full and final settlement not only of the claim of the plaintiffs, but of ail the claim of the parties The learned District Judge also observed that the arbitrator had not left out any disputed point, but had determined all the differences which the parties had submitted before him and this was also clearly mentioned in the award. The learned Judge, therefore, reached the conclusion that the award could not be said to be vague and accordingly he decided the issue against the Union of India.
7. The learned District Judge then proceeded to consider issue No. 2. He analysed it and noticed that it comprised of two objections: (1) that the arbitrator had gone beyond the terms of the reference; and (2) that he misconducted the proceedings. Regarding the first objection the learned District Judge referred to clause 33 of the agreement which was the arbitral clause and found that ' it authorised the arbitrator to decide all disputes and differences between the parties including the construction and interpretation of any of the terms and conditions of the agreement. The learned Judge accordingly held that the mere fact that a certain item was not mentioned in the schedule to the agreement did not mean that the arbitrator was not empowered to deal with that matter. In his view, the arbitrator was entitled to give his finding regarding the application of the conditions and terms of the agreement. Then he considered at length the second objection whether the arbitrator had misconducted the proceedings. He noticed at the outset that it was apparent from the reply of the Union of India that the objection was not regarding the misconduct of the arbitrator himself. In other words, there was no allegation that the action of the arbitrator amounted to - moral lapse. He then applied himself to the question whether there was any legal misconduct. The connotation of the term 'legal misconduct' according to the learned District Judge was that it was misconduct not amounting to moral turpitude and in that sense it had a very wide meaning, though it was difficult to give an exhaustive definition of what amounts to legal misconduct.
The learned District Judge referred to the Indian Minerals Co. v. The Northern India Lime Marketing Association, AIR 1958 All 692 and observed that 'legal misconduct means misconduct in the judicial sense arising from some honest, though erroneous breach and neglect of duty and responsibility on the part of the arbitrator causing miscarriage of iustice.' Then the learned Judge noticed several instances of legal misconduct'. It included, according to him, failure to perform the essential duties which are cast on an arbitrator as such. It also included any irregularity of action which is not consonant with general principles of equity and good conscience which ought to govern the conduct of an arbitrator Having stated the principles the learned District Judge then proceeded to consider their applicability to the facts and circumstances of the case. The learned District Judge observed that to start with the arbitrator had taken down detailed notes of his proceedings and all the notes of the proceedings had been tendered in evidence on behalf of the one or the other parties and their genuineness was not disputed. Having referred to the several order-sheets in detail he noted that the arbitrator by his letter dated 19-1-63 required both the parties to submit a joint statement containing factual information and the details of the actual work done during the period of the contract. Regarding this the arbitrator gave detailed directions. Accordingly both the parties, submitted the joint statement under their signatures on 11-2-63. On the basis of this joint statement the arbitrator prepared the summary containing a comparative table of the amount due according to the plaintiffs and that due according to the defendant and it was then that he gave his award on 12-2-63. On the basis of his examination of the proceedings of the arbitrator the learned District Judge reached the following conclusion:
'A perusal of the above mentioned proceedings taken by the arbitrator clearly shows that he did not anywhere fail to perform the essential duties which were cast on him as an arbitrator. He conducted the proceedings in consonance with general principle of equity and good conscience giving full opportunity to the parties to place their respective cases before him point by point.'
8. Then the learned District Judge considered the various other pleas advanced by the defendant. As regards the arbitrator's failure to take evidence, the learned District Judge observed that it did not appear from the proceedings that at any time the defendant wanted to lead evidence regarding any matter. It could not, therefore, be said that the arbitrator had not given any opportunity to produce evidence. Then, as regards the contention that the arbitrator did not take into account the sums already paid to the contractor by the Railway, the learned District Judge observed that the learned counsel for the defendant did not press this point as well in his arguments and rightly so. The learned District Judge referred to the joint statement prepared by both the parties which showed in column No. 3(c) that an amount of Rs. 3,14,116.04 paise had been admittedly paid to the contractor by the Railway and there was no dispute regarding this amount. He also observed that the summary of the account prepared by the arbitrator showed that this item had been credited to the Railway Administration. It was, therefore, wrong to say that the arbitrator did not take into account the sums already paid to the contractor Then the learned District Judge considered at length the contention that the arbitrator had not given any finding on the several issues except issue No. 1 and he also considered the question about the consideration of the counter-claim made by the Railway. The learned District Judge observed that an arbitrator was not bound to give his findings separately for the issues raised before him. Apart from this, accord- ing to the learned District Judge, the procedure had already been settled and it did not require the arbitrator to decide each issue first. The learned Judge also referred to clause 33 of the agreement and observed that that clause also did not direct the arbitrator to give detailed findings point by point. Consequently the learned Judge reached the conclusion that there was no misconduct of the proceedings even if the arbitrator had abstained from giving detailed findings on the several issues.
9. As regards the counter-claim, the learned District Judge observed that in the joint statement admittedly filed by the parties for the several claims month-by-month under all the major heads it appeared that the amount that had been paid to the plaintiffs had been shown and according to this statement itself, on the defendant's own showing, the plaintiffs were entitled to get some amount from the defendant. The learned District Judge, therefore, held that there was no scope for any counter-claim in the circumstances and it had not been mentioned in the joint statement either. The learned District Judge also repelled the contention that issue No. 1 had been decided in favour of the defendant in toto. The finding on issue No. 1 only laid down certain principles on which the rates were to be applied and there was thus no question of deciding any item of claim contained in the joint statement. The learned District Judge then noticed that the arbitrator in the case was next senior most officer of the Northern Railway who was fully conversant with the rules governing the loading and unloading of goods by the contractors He had heard arguments at great length and the proceedings revealed that he had taken sufficient pains in trying to understand the point of view of each party. In the opinion of the learned District Judge it was not open to the Court to enter into the merits of the claim and there was no allegation of any improper motive to the arbitrator. In the result the learned District Judge decided issue No. 2 against the defendant.
10. Lastly we may turn to issue No. 3. It was argued by the defendant that although the suit before the District Judge was for a smaller amount the award had been given for a much larger amount. In repelling this plea the learned District Judge observed that some claims were specifically reserved in the plaint and the claim put forth before the arbitrator covered the entire period of the contract and all kinds of claims. In the circumstances, according to him, it could not be said that the arbitrator had acted without jurisdiction. Consequently he decided this issue also against the defendant.
11. In the result the District Judge accepted the award and passed a decree against the defendant-appellant as noticed at the outset.
12. In assailing the judgment of the learned District Judge, Shri. Magraj appearing for the Union of India, has taken 4 grounds before us namely; (1) the award was vague, (2) the award was not valid as the arbitrator had failed to decide all the points of dispute, (3) that the arbitrator had gone beyond the terms of the reference and has otherwise mis-conducted himself, and (4) the award was given for an amount tar exceeding the amount claimed by the plaintiff in the suit. In elaboration of his arguments Shri Magraj submitted that Article 33 of the agreement between the parties governed the master and it envisaged arbitration on all the points in the agreement including dispute, if any, regarding the terms of the agreement. According to the learned counsel, as in the present case the reference to the arbitrator was not made through the court, but by the parties themselves and they put in their respective claims before him, the points of difference emerging therefrom namely, the issues should be taken to be the several disputes between the parties. It was, therefore, the duty of the arbitrator, Shri Magraj maintains, to decide all the issues separately. Shri Magraj, however, accepts the position that the arbitrator need not give any reasons for his conclusion, but he was bound to decide each issue or dispute between the parties. Shri Magrai maintain? that the arbitrator had himself laid down a certain procedure and had framed issues, but even then he has failed to give finding on each issue with the result that the award was rendered vague and unintelligible. This was, according to Shri Magraj, a patent error of law apparent on the face of the award.
Shri Magraj then submitted that the award appeared to be arbitrary and capricious inasmuch as no principle was indicated therein as to how the figures regarding the claims were arrived at According to him, it was not clear whether any interest as claimed by the plaintiffs to the tune of Rs. 84,000 on the sum due was allowed or disallowed by the arbitrator. It was also not clear whether the claim of the plaintiff for the refund of the security, which was also subject-matter of arbitration, was allowed or disallowed The award, according to him, on the face of it appeared to be most arbitrary, In other words, Shri Magrai submitted that it was not clear how the arbitrator had arrived at the figure of Rupees 4,26,828.90 paise and what were the items covered by it. Shri Magraj also submitted that the arbitrator had allowed himself to be influenced by extraneous considerations. Finally, he urged that as the award was vague it was the duty of the plaintiff-respondent to have examined the arbitrator in court as a witness. In support of his contention Shri Magraj placed reliance on Mt Ishwar Dei, v. Chhedu, AIR 1952 All 802: Gaja Sinhva Rao v. Sujat Ali, AIR 1952 Hyd 46; AIR 1958 All 692 and L Dasaradharamayya v. K. Raja Rao, AIR 1964 Andh Pra 348. Shri Magraj also referred to us certain passages in Russell on Arbitration (17th Edn.) at pages 158 & 243 and the form of awards contained in pages 431 and 432 ibid. He also read to us certain passages from Halsbury's Laws of England (Vol. II) page 13, and some passages from Articles 341 and 342 of Corpus Juris (Vol. V.) We propose to deal with the salient features of these citations in the course of the discussion.
13. Shri M.M. Yyas, on the other hand, stoutly contested the stand taken by Shri Magraj. He referred to section 30 of the Arbitration Act and submitted that the award of an arbitrator could be set aside only on the grounds mentioned in that section and on no others and, according to the learned counsel the appellant had failed to make out such grounds. Shri Vyas submitted that the arbitrator was a very senior officer of the Railway itself and he was next to the General Manager and as such he knew the rules and procedure regarding the contracts of porterage and handling. Therefore, when no malice had been imputed to the arbitrator the award cannot be set aside. Shri Vyas submitted that the real dispute between the parties was the claim for money which had first been put forth by the plaintiff in its suit and then in greater detail after including the claims left out in the plaint before the railway administration. Shri Vyas thus maintains that what was referred to the arbitrator by the General Manager was the dispute about the claim of the money put forth by the plaintiff and disputed by the defendant appellant The issues, according to Shri Vyas, which came at a later stage after the arbitrator had entered upon the arbitration proceedings, could not be said to be the points referred to him Shri Vyas took us through the old Civil Procedure Code and referred us to the form of award contained therein. He submitted that the award has to be in this form though in the subsequent legislative changes the form of the award has not been adhered to as by long usage the form was already well known and also crystallised. According to Shri Vyas the award is not like a judgment of a court but in the nature of a decree and it should contain only the sum that is awarded. He, however, concedes that the award has to be certain or in clear terms.
Shri Vyas disputes, that the award is bad on the ground that it did not indicate what 'reasons weighed with the arbitrator in giving the award not was it necessary, according to him, to decide all the issues separately and ever if there were several points of dispute a lump sum could be awarded in respect of all of them taken together Shri Vyas also contested the position that there was any error of law disclosed in the award. According to Shri Vyas, it is not open to the court to travel beyond the award itself to discover any error of law. Error according to him, should be in the operative part of the award. Shri Vyas placed reliance on a number of cases such as Sreelal Mangtulal v. J.F. Madan, AIR 1925 Cal 599; Jivraj Baloo Spinning and Weaving Company Ltd. v. Champsey Bhara and Co., AIR 1920 Bom 256; Champasey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd.. AIR 1923 PC 66 which affirmed the last mentioned Bombay case, AIR 1940 Lah 186; AIR 1944 PC 83: Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji, AIR 1965 SC 214 and Bungo Steel Furniture (Pvt.) Ltd. v. Union of India, AIR 1967 SC 378. Two recent decisions of the Supreme Court appearing in the blue prints namely. Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., Indore Civil Appeal No. 878 of 1964 D/- 19-8-66 = (AIR 1967 SC 1030) and the Union of India v. Bungo Steel Furniture Private Ltd., Civil Appeals Nos. 373 and 543 of 1965 D/- 14-9-66= (AIR 1967 SC 1032) were also brought to our notice Shri Vyas also placed reliance on Smt Santa Sila Devi v. Dhirendra Nath Sen, AIR 1963 SC 1677; Narpat Rai v. Devi Das, (1911) 14 Ind Cas 371 (Lah): Nanjappa v. Nanja Rao. (1912) 16 Ind Cas 478 (Mad); Jupiter General Insurance Co, Ltd. v. Calcutta Corporation, AIR 1956 Cal 470; Rustomjee Dorabsha v. Manmal Prabhudayal. AIR 1964 Madh Pra 15; Union of India v Mangaldat N Varma. AIR 1958 Mad 296: Assadullah Makhdoomi v Lassa Baba. AIR 1966 J and K 1; Pannalal Paul v Smt. Padmabati Paul. AIR 1960 Cal 693, and extracts from Duke of Buccleuch v Metropolitan Board of Works. (1872) 5 HL 418 reproduced in Ward v. Shell-Mex and B P., Ltd., 1951-2 All ER 904 Shri Vyas also referred us to some passages from Russell on Arbitration (17th Edition) pase 242. Corpus Juris Secundum (Vol. 6) pages 116, 123. 185 and 213, and to some passages from Halsbury's Laws of England (Vol II) page 57.
14. Before we proceed to deal with the merits of the present case we find it convenient to refer, in brief, to the principles elucidated in the above citations. In our view the difficulty does not lie so much in gathering or enunciating the principles, but in applying them to a particular situation in hand. The ground? on which an award can be challenged are contained in S. 30 of the Arbitration Act which reads as under:
'Section 30 Grounds for setting aside award An award shall not be set aside except on one or more of the following grounds, namely:
(a) that an arbitrator or umpire has misconducted himself or the proceedings:
(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35:
(c) that an award has been improperly procured or is otherwise invalid.'
This section, therefore, clearly enjoins that the award shall not be set aside except on one or more of the grounds mentioned therein. Clauses (b) and (c) are clearly inapplicable in the present case and we are, therefore, left to consider only the applicability of clause (a) of the section. It was conceded before the learned District Judge that there was no such misconduct on the part of the arbitrator as implied any malice, dishonesty or fraud on the part of the arbitrator. In other words, it was not a case of any misconduct from the moral point of view. The contention was only confined to a case of legal misconduct on the part of the arbitrator in the conduct of the proceedings. The learned District Judge has, in our view, correctly pointed out that legal misconduct means any neglect of the duty and responsibility of the arbitrator. In Halsbury's Laws of England 3rd Edition (Vol. II), it has been pointed out under Article 126 that the expression 'misconduct' is of wide import and it includes or the one hand bribery and corruption and on the other a mere mistake as to the scope of the authority conferred by the agreement of reference or a mere error of law appearing on the face of the award. According to the statement of law contained In this Article, misconduct occurs of the arbitrator or umpire fails to decide all the matters which are referred to him; if by his award he purports to decide matters which have not in fact been included in the agreement of reference or if the award is inconsistent, or is uncertain or ambiguous, or is on its face erroneous in matter of law, or even if there has been irregularity in the proceedings. Several other instances of legal misconduct have been given and we need not notice them all. Shri Magrai's contention, as we have already noticed, mainly centres round the one ground that the arbitrator has failed to decide all the issues or points in dispute before him and his award was, therefore, incomplete. He also submitted in this connection that the award was arbitratory and capricious and no principle was indicated therein showing how the amount awarded had been arrived at and what items of claim were accepted or refined. In AIR 1952 All 802 cited by Shri Magraj the learned Judge observed as follows:
'It is not necessary for the arbitrator to exhaustively give reasons for the conclusions arrived at by him or to give his findings on the issues raised in the case. His award would be a perfectly valid and good award provided he has given a clear decision of the case. Where on the face of it the award is very vague and it is difficult to know what hip findings actually were the award is not a decision of the case at all. Further if the award does the very thing which the parties wished to avoid namely going to a Court of law and bearing the expenses of protracted litigation the purported award de- feats the very purpose of arbitration by throwing the parties back to the very position from which they wanted to escape. The defect in the award is a vital one and goes to the root of the award given by him and the award must, therefore, be treated as otherwise invalid'. '
In this case a wife sued her husband for dissolution of the marriage on the ground of ill-treatment, adultery and immorality. The defendant denied the allegations. After the issues were framed in the suit, the whole case was, with the agreement of the parties, referred to arbitration of a pleader. The arbitrator in his award stated that the best thing was not to dissolve the marriage forthwith but to give sometime to the parties to reconsider the whole situation and their interests For that end in view he, therefore directed that the defendant should bring a suit for restitution of conjugal rights against the plaintiff within a year. In case the defendant was to succeed in his suit, the marriage shall remain intact, but if he was unsuccessful then the marriage will stand dissolved thereafter. It was in this context that the above observations were made and they are hardly applicable to the case in hand.
15. In AIR 1952 Hyd 46 it was observed that 'an award must determine all the differences which the parties by their submission referred to arbitration. An award which omits to decide some of the important issues raised by a party which are covered by the terms of reference is bad and unenforceable.' In making these observations the learned Judges relied on the passage from Halsburv's Laws of England which we have already referred. The learned Judges also referred to an American case which was again to the effect that an award is fatally defective it the arbitrator did not make a full and final award upon all the matters submitted to him. The learned Judges, however recognised that an award need not expressly decide each point but the authorities do not go so far to hold that an arbitrator need not cover the whole case. The learned Judges also recognised that if it can be inferred that award had incidentally decided all the questions in dispute, that is sufficient. Then they examined the particular facts of the case and came to the conclusion that the award was bad as it had failed to decide all the disputes referred to the arbitrator.
16. In AIR 1958 All 692 the learned Judges referred to the leading English case, Randall v Randall (1805) 7 East 81, and observed that where there are more than one matters in dispute between the parties and an arbitrator was asked to decide each one of them and if he fails to decide one or more of such matter then the whole of the award was bad The learned Judges observed as follows:
'An award which does not dispose of all the matters referred to arbitration is incomplete and consequently it is invalid in law. The court may in such a case either remit the award under Section 16(a) or set it aside under Section 30. The ground for so holding is that when the parties agree to refer the matter to arbitration there is an implied condition in the submission of the parties that the arbitrator shall dispose of all the matters.
Failure of the arbitrator to decide the question as to whether the defendant made a breach of the contract if he did not supply the minimum five wagons to the plaintiff on the ground that his Dohad Factory was to have preference, and also the question whether the defendant was in fact justified in supplying materials to other parties in the territory in question after entering into contract with the plaintiff would vitiate the award.'
The learned Judges, however, recognised that it is no doubt true that in fit cases and in Riven circumstances the arbitrator is not bound to give an award on each point referred to him and it is sufficient if he gives his award on the whole case.
17. The observations contained in AIR 1964 Andh Pra 348 are also to the same effect and the learned Judges also placed reliance on (1805) 7 East 81. We may, therefore, quote the relevant passage from (1805) 7 East 81 which is to the following effect:
'Upon a reference of all actions, controversies etc., and also of two distinct matters of difference: if the arbitrators omit to decide one of such distinct matters, that vitiates the whole award, which cannot therefore be enforced by attachment.'
18. The principle thus deducible from the aforementioned cases is that where two or more distinct matters of difference have been referred to the arbitrator and if the arbitrator omits to decide one such distinct matter, that vitiates the whole award and consequently the same cannot be enforced. In other words, if the matters left undecided are not to be regarded as incidental or of no material importance, or they could not be said to have been determined by implication, then the whole award stands vitiated.
19. Now we may deal with the cases cited by Shri Vyas.
20. In AIR 1923 PC 66 their Lordships of the Privy Council placed reliance on the leading case Hodgkinson v. Fernie, (1857) 3 CBNS 189 and quoted with approval the following observations from it:
'The law has for many years been settled, and remain? so at this day, that where a cause or matters in differences are referred to an arbitrator, a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact ...............
The only exception 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 necessarily arises on the face of the award or upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted I think it may be considered as established.'
Their Lordships also pointed out that this view had been approved by the House of Lords in subsequent cases such as, British Westinghouse Co. v. Underground Electric Railways Co., (1912) AC 673.
21. On this point we may refer to the very recent cases namely, Civil Appeal No. 878 of 1964 D/- 19-8-1966 = (AIR 1967 SC 1030) and Civil Appeals Nos. 373 and 543 of 1965 D/- 14-9-1966= (AIR 1967 SC 1032) cited by Shri Vyas. After referring to the observations of William J. and those of their Lordships of the Privy Council in AIR 1923 PC 66 their Lordships of the Supreme Court observed that 'it is well settled that the Court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record for the purpose of finding out whether or not the arbitrator has committed an error of law and that the award of the arbitrator can be set aside on the ground of error of law on the face of the award only when in the award or in a document incorporated with it, as for instance, a note appended by the arbitrator stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous.' In their Lordship's opinion, therefore, it was not permissible for the Court to examine the affidavits produced in the case for ascertaining whether the arbitrator had committed any error of law (vide observations in Bungo Steel Furniture Private Ltd. AIR 1967 SC 378).
22. In AIR 1965 SC 214 their Lordships again referred to AIR 1923 PC 66 with approval and observed as follows:
'The Court in dealing with an application to set aside an award has not to consider whether the view of the arbitrator on the evidence is justified. .The arbitrator's adjudication is generally considered binding between the parties, for he is a tribunal selected by the parties & the power of the Court to set aside the award is restricted to cases set out in S 30 of Arbitration Act. 1940. It is not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. On the assumption that the arbitrator must have arrived at his conclusion by a certain process of reasoning, the Court cannot proceed to determine whether the conclusion is right or wrong. It is not open to the Court to attempt to probe the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of his award.'
23. In AIR 1967 SC 378 in dealing with the application of section 30 of the Arbitration Act, their Lordships observed as follows:
'If an arbitrator, in deciding a dispute before him, does not record his reasons and does not indicate the principles of law on which he has proceeded, the award is not on that account vitiated. It is only when the arbitrator proceeds to give his reasons or to lay down principles on which he has arrived at his decisions that the Court is competent to examine whether he has proceeded contrary to law and is entitled to interfere if such error in law is apparent on the face of the award itself.'
'The Court in dealing with an application to set aside an award has not to consider whether the view of the arbitrator on the evidence is justified. The arbitrator's adjudication is generally considered binding between the parties, for he is a tribunal selected by the parties and the power of the Court to set aside the award is restricted to cases set out in Section 30 of the Arbitration Act. An award may be set aside by the Court on the ground of an error ,of law apparent on the face of the award but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion.'
24. In AIR 1940 Lah 186, the learned Judges observed that 'an arbitrator is not bound by the technical rules of procedure which the Court must follow, nor' need he record separate findings on the various points on which the parties are at issue, or write a reasoned judicial decision. All that he is required to do is to give an intelligible decision which determines the rights of parties in relation to the subject matter of the reference'. These observations were affirmed by their Lordships of the Privy Council in AIR 1944 PC 83, which was a case dealt with by their Lordships in an appeal from the Lahore case. In this case the matter was referred to an arbitrator while an appeal was pending between the parties against a judgment of the original court and the point canvassed was as to what was the subject of the submission to arbitration; whether it was the whole dispute and not merely the matter of appeal. Their Lordships pointed out that the whole dispute will be deemed to have been referred to the arbitrator as the parties wanted a den sion on merits in order to avoid litigation. Thpir Lordships observed that the parties chose to refer the matter to one of their relatives and for better or worse they chose to submit the dispute to him and there was no ground for impugning the validity of the award.
25. In AIR 1925 Cal 599, the learned Judges pointed out that an award of the arbitrator is intended to be final both in fact and law, and the Courts will not inter- fere except on certain well-recognised principles and in certain well-defined circumstances. The learned Judges added that an award made in a form in which it is calculated to have an effect, which is the opposite of finality, should be deemed as falling below the standard. The arbitrator ought not to include evidence or refer to or discuss authorities making his award more like the judgment of judge which is subject to appeal than the award of an arbitrator.
26. In AIR 1956 Cal 470, the learned Judge pointed out that it cannot be said that the formal framing of issues or their formal determination separately was a procedure at all enjoined as compulsory in an arbitration proceeding. The learned Judge also added that for challenging an award on the ground of apparent error, the error should be found in the operative part of the award, because reference in the recital does not incorporate a document as to form part of the award.
27. In (1912) 16 Ind Cas 478 (Mad), the learned Judges observed that an award need not be reasonable but it should be intelligible.
28. In AIR 1964 Madh Pra 15, it was pointed out following, AIR 1923 PC 66 and other cases that an arbitrator need not give any reasons for his decision and need only set down his decision in a clear and unambiguous manner The learned Judges added that an arbitrator gets jurisdiction by consent of the parties and his decision on facts is in no event subject to scrutiny by courts except on the ground of corruption or fraud or where the question of law necessarily arises on the face of the award.
29. In (1911) 14 Ind Cas 371 (Lah), it was observed that where the whole case has been submitted to the arbitration of a person, his duty is to decide the whole dispute substantially though he is not bound to write a judgment and give his finding on each issue.
30. Assadullah Makhdoomi's case, AIR 1966 J & K 1 only follows the Supreme Court cases which we have already referred.
31. In AIR 1958 Mad 296, the learned Judges pointed out that the fact that the Umpire did not give any reasons in the award cannot by itself vitiate the award. They also observed that the validity of the award cannot be challenged on the ground that each item of claim or counter-claim was not specifically dealt with and Umpire's decision thereon recorded.
32. Then we may refer to the passage from Halsbury's Laws of England referred to in 1951-2 All ER 904. It is about the evidence of the umpire or arbitrator Lord Cairns observed that 'the award is a document which must speak for itself, and the evidence of the umpire is not admissible to explain or to aid, much less to attempt to contradict what is to be found upon the face of that written instrument.' It was also pointed out that it was not open to the Court to investigate as to by what mental processes the arbitrator had arrived at his decision.
33. In AIR 1960 Cal 693, Bachawat J., as he then was, pointed out that it was no misconduct if the arbitrator did not make separate findings on each issue. The learned Judge pointed out that the arbitrator may award on the whole case. All that is necessary is that the arbitrator has given an award on the whole case whereby he has fully and finally determined the rights of the parties in respect of the subject-matter referred.
34. Lastly, we may refer to AIR 1963 SC 1677. Their Lordships reviewed a number of authorities in this case and pointed out how far and under what circumstances an award could be challenged on the ground of its incompleteness and what principles the Court has to bear in mind. Their Lordships observed as follows:--
'Where an award given by the arbitrator is filed in Court and it is challenged on the ground of its incompleteness, the Court has to bear in mind certain basic positions. These are: (1) a Court should approach an award with a desire to support it, if that is reasonably possible, rather than to destroy it by calling it illegal; (2) unless the reference to arbitration specifically so requires the arbitrator is not bound to deal with each claim or matter separately, but can deliver a consolidated award. The legal position is clear that unless so specifically required an award need not formally express the decision of the arbitrator on each matter of difference; (3) unless the contrary appears the Court will presume that the award disposes finally of all the matters in difference: and (4) where an award is made de premises (that is, of and concerning all the matters in dispute referred to the arbitrator'), the presumption is, that the arbitrator intended to dispose finally of all the matters in difference: and his award will be held final, if by any intendment it can be made so.'
'Where, therefore, after taking into consideration the arbitration agreement, the statements filed by the parties and the document produced, the arbitrator proceeds to give his 'award in writing as to all disputes' referred to him, the Court will assume that the arbitrator has considered and disposed of every claim made or defence raised. Since the award states that it is made of and concerning all the matters in dispute referred to the arbitrator, there is a presumption that the award is complete. In such a circumstance, the silence of the award as regards a particular claim must be takrn to be intended as a decision rejecting the claim to that relief.'
35. In our view, the last mentioned case points out exhaustively as to what should be the basic approach of a Court in dealing with the question of invalidity of an award on the ground of incompleteness. As far as possible the Court should make a reasonable effort to sustain the award. Their Lordships pointed out that it is not necessary for the arbitrator to deal with each claim or matter separately and it is open to him to award an consolidated amount for a number of claims. This is, however, subject to one important condition and it is this that if the reference to arbitration specifically requires the arbitrator to deal with certain disputes specifically the position is otherwise and in that event the award may be taken to be incomplete and thus defective or invalid. However, in this regard the rule is that the Court will presume that the award disposes finally all the matters in difference, unless the contrary appears to the Court and where an award is made concerning all the matters in dispute the presumption is that the arbitrator intended to dispose finally of all the matters in dispute referred to him. This conclusion can be reached if by necessary intendment the award can be held to dispose of all the matters.
36. We may now refer to the passages from Halsbury's Laws of England, Russell oil Arbitration and Corpus Juris, to which our attention was invited by learned counsel on either side.
37. In Halsbury's Laws of England 3rd edition (Vol. II), it was observed in Article 34 (page 13) that a general reference of all disputes by a contract with an arbitration clause is generally limited by the nature of the instrument to disputes arising out of or in connection with the main articles of the agreement. We have not been able to appreciate how this passage helps Shri Magraj.
38. Chapter X of Russell on Arbitration, beginning from page 158, deals with the procedure of actual submission in cases where arbitration is provided in contracts and the reference of arbitration is made out of Court. To start with the parties in such cases must deposit the agreement with the arbitrator who must then satisfy himself that the submission is wide enough to cover the dispute with which he has to deal. Then it is pointed out that at the preliminary hearing he should obtain particulars of the opponent's claim or counter-claim, as the case may be. In such cases the author points out that the points of dispute are formulated after the arbitrator has commenced the proceedings. The following observations are pertinent to notice :-
'Whether the parties particularly wish it or not, the arbitrator must obtain a clear statement of the disputes which are submitted to him for his decision, particularly if the disputes are not already defined by the terms of the submission. For example, in the case of disputes arising out of a contract in which there is an arbitration clause, it not infrequently happens that at the date of the appointment of the arbitrator the disputes are not fully defined. An account may have been delivered, disputes may have arisen upon that account, an arbitrator may have been appointed, yet at the date of the preliminary meeting or the hearing it may not be clear what is in dispute between the parties or what it is the parties desire the arbitrator to decide.'
39. It is further pointed out that the arbitrator has implied power to order each party to deliver particulars of the claim, and of the counter-claim if there should be one, in order to enable his opponent to know the case he has to meet and to prepare his evidence for the trial. The author, however, added that what particulars are to be stated must depend on the facts of each case. Though it is absolutely essential that the pleading, not to be embarrassing to the other side should state those facts which will put the other side on its guard and tell him the case he has to meet when it comes on for trial. Shri Magraj, therefore, argued that the issues that the arbitrator had framed after taking the claim and the counter-claim from the respective parties constituted the points of dispute referred to the arbitrator which the arbitrator was duty bound to decide. At page 243 the author points out as to how several matters in issue are to be dealt with. He observes as follows:--
'The rule as to the necessity of specifically adjudicating upon the matters submitted to the arbitrator has been thus laid down : 'The rule is this -- where there is a further claim made by the plaintiff or a cross demand set up by the defendant, and the award professing to be made of and concerning the matters referred is silent respecting such further claim or cross demand, the award amounts to an adjudication that the plaintiff has no such further claim, or that the defendant's cross demand is untenable; but where the matter so set up from its nature requires to be specifically adjudicated upon, mere silence will not do.' An illustration of the latter position is the case of an arbitrator called upon to decide upon which of two demises a plaintiff in ejectment was entitled to recover, or whether or not a partnership existed between two persons, or what was the interest that a party took in certain property, whether an estate tail or an estate in fee. In such cases as these a general award professing to adjudicate upon all the matters referred would not suffice.'
Some cases have been referred to in the foot-note in support of these observations, but unfortunately none of the parties have been able to place them before us.
40. In Article 341 of Corpus Juris (Vol V), it has been observed that the power of the arbitrator being confined by the submission, as already shown, the rule is not only that the arbitrators cannot go beyond the submissions, but that they must decide all the matters embraced in the submission, which are brought before them by the parties. If they violate this rule or the award shows that they have not acted within it, the award shall be void. In Article 342 it is further laid down that where the submission is of divers matters, distinctly enumerated, and it appears from the whole award that the matters submitted were adjudicated upon, it is sufficient, although each particular is not specified in the award, unless the submission requires a separate finding as to each matter. It was further pointed out that if the parties intend that arbitrators shall award distinctly upon each issue, they should so state in the submission. However, if more than one separate and distinct matter is specifically submitted, and the general finding does not necessarily, include all such matters, the award must show that each of the separate matters was considered and passed upon by the arbitrators.
41. The passages cited by Shri Vyas from Corpus Juris Secundum (Vol. VI) on the subject or award deal with the question whether giving of reasons in the award is necessary and an award is not bad if no reasons are given, but the statement of conclusion should be sufficiently clear. They also refer that mistake of law should be apparent on the face of the award. As the last mentioned point is already covered by the Supreme Court cases referred to above, we need not quote the passages herein.
42. We do not find any merit in Shri Magraj's submission that the arbitrator allowed himself to be influenced by extraneous considerations. We have perused the proceedings The arbitrator has recorded the contentions that were made before him at great length almost verbatim from day to day, and he has also recorded the observations made by him during the hearing. He had undoubtedly given full opportunity to both the parties to present their cases. It cannot, therefore, be urged with cogency that the arbitrator had been influenced by extraneous considerations. We also do not find any merit in the submission that the arbitrator should have been examined as a witness in the case by the defendant-respondent. It was certainly not open to the Court to travel beyond the award or at best the proceedings of the arbitrator brought on the record of the Court. It was not open to the Court to make a probe into the inner processes of the working of the arbitrator's mind. The crux of the whole matter, as we look at it, is whether the award turned out by the arbitrator is bad on account of its incompleteness for want of determination of the several issues framed by the arbitrator in the course of the proceedings. Shri Magrai has very rightly conceded that it was not necessary for the arbitrator to record any reasons, though he strenuously contends that the arbitrator was duty hound to record his findings on several issues which constitute distinct and separate disputes.
Shri Vyas, on the other hand, has stoutly contended that the dispute before the arbitrator was really one namely, the determination of the right or liability of one party towards the other. In other words, the arbitrator had only to determine what amount was payable by one party to the other and no more. According to Shri Vyas, the several issues were framed by the arbitrator only with a view to giving proper attention to the several aspects of the dispute and the issues were only incidental to the determination of the main dispute. He further strongly contended that the objections filed by the defendant-appellant did not show that this point was taken before the District Judge in the manner it is sought to be raised now at the appellate stage. The resume of cases cited before us unmistakably shows that the arbitrator is not bound to deal with each claim separately and it is open to him to deliver a consolidated award unless the arbitration specifically requires the arbitrator to deal with each claim or matter separately or unless the submission to arbitration specifically requires the arbitrator to give his decision separately on each dispute, he need not formally express his decision on each matter of difference. It is also evident that it will depend on the facts and circumstances of each case whether the issues are distinct and separate or they are incidental to a proper determination of the main dispute which is the subject-matter of arbitration.
43. In the light of these observations we now proceed to deal with the merits of the case in hand. The crux of the matter is whether the disputes or differences as a whole subsisting between the parties were referred to arbitration or whether it is only the issues framed by the arbitrator that constituted the subject-matter of the dispute as referred to the arbitrator. In other words, if the issues were merely the points for decision as a Court would frame them, then according to the dicta of the several cases referred above, the arbitrator was not bound to decide each issue separately and he could have awarded a consolidated sum. On the other hand, if we can predicate that it were the issues that were the several disputes referred to the arbitrator and he was specifically required to deal with or to decide each claim or matter separately then he could not deliver a consolidated award without deciding each point as required in the submission to adjudication. For coming to a proper conclusion we have to examine the matter in its proper perspective.
44. Now the agreement provided for an arbitration clause which runs as follows:--
'Clause 33. If any dispute, differences or question shall arise between the Railway administration and the contractor as to the respective rights, duties and obligations of the parties hereto or as to the construction or interpretation of any of the terms and conditions of this agreement or as to its application (except the decision whereof is herein expressly provided for) then the same shall be referred to the sole arbitration of the General Manager of the Railway or if he be unable or unwilling to act then to the sole arbitration of any person appointed by him in this behalf and the decision of the General Manager or the person so appointed shall be final and binding on the parties hereto.'
45. The above clause clearly envisages that where any dispute or difference or question arises respecting the rights, duties and obligations of the parties or as to the construction or interpretation of any of the terms and conditions of the agreement, then the same was to be referred to the arbitration as provided in that clause. Thus the pertinent question is as to when had the dispute, difference or question relating to the respective rights, duties and obligations of the parties arisen and what was its true ambit or scope.
46. Now to start with the plaintiff-respondent had called upon the Railway administration to settle its claims and when this was not done it filed a suit in the court of the District Judge, Bikaner, on 21-9-1959. The plaint contained the several claims, though in respect of some claims the plaintiff made a reservation to bring a separate suit as the bills in relation thereto had not been prepared by the respective Station Masters. Eventually on the application of the Railway administration under Section 34 of the Arbitration Act, the plaintiff had to go in for arbitration but till that stage the stand of the Railway administration regarding the merits of the claim had not been indicated. Thus it could not be said at all till then as to what were the precise points of difference or disputes between the parties. It appears that when the matter reached the arbitrator, he called upon both the parties to submit their respective claim petitions giving full details of the claims together with all relevant documents. On 5-12-1962, it was contended by the plaintiff itself before the arbitrator that the latter should take up the counter-claim put up, by the Railway administration first, after listening the arguments of both the parties.
We have already reproduced in the earlier part of our judgment the minutes recorded by the arbitrator. The arbitrator clearly noted in these minutes that the Stand taken by the Railway administration was that the calculations of the amount would be done after some primary decisions were taken on the various issues involved and, therefore, the arbitrator was asked to decide those issues first. The Railway administration indicated that after these issues were decided they would work out the actual amount on the basis of the decision given on the various issues and then the balance-sheet Would be struck on that basis. It was on those submissions that the arbitrator agreed to take up the issues first so that the amount payable in respect of each claim could be arrived at. The parties were then allowed to strike down the issues jointly and then submit the issues to the arbitrator on that very day. While reproducing the issues the arbitrator himself noted 'that the parties have come forward with a list of issues which they have referred for decision by the Court.' It is thus abundantly clear that it was a case where the parties had referred certain specific issues for the decision of the arbitrator and even the arbitrator himself thought that after the decision of the issues it would be possible for the parties to work out the actual amount payable.
47. Now we have carefully studied the several issues submitted by the parties. Issue No. 1 has been decided by the arbitrator separately and we have already reproduced the decision of the arbitrator on that issue. Issues Nos. 2, 3, 4 and 5 clearly show that the controversy between the parties was about the rates only. The difference set down by them was whether the plaintiff was entitled to have the rate claimed by it; if not, what rate was applicable. This clearly implies that it was for the arbitrator to determine what rate was to be applied for each item of work. We may mention that there does not appear to have been any controversy between the parties about the quantum of work or the job done by the plaintiff respondent. The only controversy was as to at what rate the remuneration payable to the plaintiff was to be computed for the work or the job done by it. In other words, once the question of rate was adjudicated upon the only thing that was to be done was to have arithmetical calculations. What amount would be payable was not so much the subject-matter of dispute, as the question of the application of the correct rate to the several items of work done by the plaintiff-respondent. As regards issue No. 6, it may be observed that the question as to who was to prepare the bill was not material, as the point of essence was as to what was to be paid to the plaintiff for the job done by it Issue No. 7 was about the determination of the contract and that is again a matter which was distinct from what was covered by issues Nos. 2 to 5. Similarly, issue No. 8 was again a distinct matter. Issue No 9 related to the amount that may be found payable to the Railway administration.
Thus, in our view, the real dispute between the parties that was referred to the arbitrator was about the applicability of correct rate for the job done by the plaintiff-respondent In this context the question immediately arises whether by the award or In the proceedings taken by the arbitrator it can be spelt out that the arbitrator had really determined the main dispute referred to him. A perusal of the proceedings shows that the arbitrator had heard the arguments at great length regarding each issue. Thereafter he called upon both the parties to furnish factual information by his letter dated 19-1-1963 (available at page 661 of the paper book). It was desired by him that the necessary information should be furnished by both the parties after carrying out a joint check of the actual work done during the period of contract, the information was to be broken into several heads and the several heads indicated therein corresponded to the items of work covered by issues Nos. 2 to 5. The parties then submitted a joint statement divine therein their own figures according to the rates which they thought were applicable to the several items of work. There was a great disparity between the respective figures. We have carefully perused the joint statement as well as the summary thereof prepared by the arbitrator. According to the plaintiff, he had a claim for a sum of Rs. 9,57,708.91 paise whereas the amount due as per Railway's interpretation was only Rs. 4,12,175.97 paise. According to both the parties Rs. 3,57,822.42 paise had been paid to the plaintiff-contractor. Thus, according to the plaintiff, an amount of Rs. 5,99,886,49 paise was payable and according to the Railway administration only an amount of Rs. 54,353.65 paise was payable.
Now, if the arbitrator were to accept the amount claimed by the plaintiff in toto and thereby reject the claim of the Railway administration in toto, it could be argued with some show of reason that by implication the arbitrator has held that the rates claimed by the plaintiff were the rates applicable, but the arbitrator has not accepted either of the two figures and had come to the conclusion that the amount of Rs. 4,26.828.90 paise was payable and Rs. 1,73,057.59 paise was to be disallowed. We have not been able to discover at what rate the amount awarded by the arbitrator could be arrived at In other words, we are not in a position to say that by implication the arbitrator should be taken to have determined the real dispute referred to him by the parties about the correct rate applicable for each item of work Nor is it clear whether the dispute about interest covered by issue No H was decided by him. It is quite clear from the cases placed before us by either party that though normally it is not necessary for the arbitrator to deal with each claim or matter separately and he need not Give any reasons for his decision in relation thereto yet it has been held that if the reference specifically requires him to deal with certain disputes and if he fails to give his decision on those specific points or disputes, then the award stands vitiated.
After a careful consideration of the whole matter we are unable to hold that the arbitrator had decided the question of the correct rate applicable to the several jobs done by the contractor. In other words, he has failed to discharge the essential function entrusted to him by the parties. We have already quoted the relevant passages from Russell on Arbitration (17th edition). The procedure for dealing with arbitration when there is a provision for arbitration in an agreement has been set out in Chapter X of that book. Normally there are two methods of referring disputes to an arbitrator. The first method for the contending parties is to sit together and draw out the matters in dispute between them and refer those disputes to the arbitrator for his award. The other method, which is usually followed in case there is already an agreement between the parties to refer their dispute to an arbitrator, is that one of the contesting parties approaches the arbitrator and submits his claim before him In such a case the arbitrator calls upon the opposite party to put In his statement in defence or file his counter-claim, if any, and thereafter he finds out what are the matters in dispute between the parties. We may reproduce the following extracts from Russell (Chapter X):--
'(1) The Preliminary Meeting.
It is customary for the arbitrator to hold a preliminary meeting with the parties, before commencing the actual hearing.
The proceedings at this preliminary meeting are somewhat in the nature of the proceedings on a summons for directions in an action in the High Court. Matters usually dealt with.
The subjects generally dealt with are applications by either party:
(a) For particulars of his opponent's claim or counter-claim, as the case may be;
(b) For discovery and inspection of documents;
(c) For inspection of property and things
(i) by parties
(ii) by the arbitrator;
(d) For delivery of points of claim and defence;
(e) For the fixing of a lime and place of hearing;
(f) For the arrangement of other matters to shorten or facilitate the hearing.
Unless Section 12(1) is excluded, by the arbitration agreement, the arbitrator will have wide powers to deal with these matters, while the court also has power to make orders as to these and other interlocutory matters, Pleadings. Points of Claim and defence.
In some cases it may be desirable that pleadings or points of claim and defence shall be delivered, so that each party may know the exact issues which have to be tried and the case he has to meet. Points of claim and defence are similar to pleadings in an action. The arbitrator has a discretion to order them, and after hearing the parties he should do so if he thinks that they are necessary for properly defining the issues to be tried.
If he decides to make such an order he ought to fix a time within which the claim and defence respectively are to be delivered, giving so long after the delivery of the claim for the delivery of the defence. The time allowed in each case should be reasonable.
Whether the parties particularly wish it or not, the arbitrator must obtain a clear statement of the disputes which are submitted to him for his decision, particularly if the disputes are not already denned by the terms of the submission. For example, in the case of disputes arising out of a contract in which there is an arbitration clause, it not infrequently happens that at the date of the appointment of the arbitrator the disputes are not fully defined. An account may have been delivered, disputes may have arisen upon that account, an arbitrator may have been appointed, yet at the date of the preliminary meeting or the hearing it may not be clear what is in dispute between the parties or what it is the parties desire the arbitrator to decide.' At page 243. the author observes as follows:
'Where several matters are in issue -
Where several claims are made between the parties, the award must decide upon each of them. The award will however be sustained even though the arbitrator has omitted to notice some claim put forward by a party, if, according to the fair interpretation of the award, it is to be presumed that the claim has been taken into consideration.
Thus, although it is generally advisable to draw the award in that form, it need not in terms profess to be made 'of and concerning the premises.' or formally express that the arbitrator adjudicates on every matter in difference, if it appears on the face of the instrument that it is an award on all the matters submitted.
The rule as to the necessity of specifically adjudicating upon the matters submitted to the arbitrator has been thus laid down: 'The rule is this -- where there is a further claim made by the plaintiff or a cross demand set up by the defendant, and the award professing to be made of and concerning the matters referred is silent respecting such further claim or cross demand, the award amounts to an adjudication that the plaintiff' has no such further claim, or that the defendant's cross demand is untenable but where the matter so set up from its nature requires to be specifically adjudicated upon, mere silence will not do.' An illustration of the latter position is the case of an arbitrator called upon to decide upon which of two demises a plaintiff in ejectment was entitled to recover, or whether or not a partnership existed between two persons, or what was the interest that a party took in certain property, whether an estate in tail or an estate in fee. In such cases as these a general award professing to adjudicate upon all the matters referred would not suffice.'
48. In the present case the perusal of the proceedings shows that the arbitrator by and large followed the second method which we have narrated above. We are thus satisfied that the arbitrator had clearly taken upon himself to decide the points of difference referred to him by the parties on 5-12-62. It is not correct to say that the parties only wanted the arbitrator to determine what sum was payable by one to the other. Indeed there was no serious dispute between them regarding the actual amount that may be payable once the question of rate was adjudicated upon. The award does not show what decision the arbitrator has given regarding the rate that was to be applied to the various items of work. We also cannot come to a conclusion that by necessary intendment he decided the question of rate. Had he accepted the claim of one party or the other in toto, as already observed it would have been possible to infer that by implication he accepted the rate claimed by that party. But, as we have already pointed out, the figure awarded by the arbitrator cannot be worked out on either of the two rates claimed by the respective parties. We are left to guess what was the rate adopted by the arbitrator. We are, therefore, of the opinion that the arbitrator had failed to decide the main points of difference referred to him. The award produced by him is, therefore, incomplete and defective on that ground.
We agree with the learned counsel for the respondent that the award is not vague and is otherwise quite intelligible and it is not bad merely because no reasons have been given by the arbitrator. Nor can it be said that the arbitrator could not have awarded an amount greater than what was claimed by the plaintiff in its plaint. It is obvious that the claim filed before the arbitrator included such claims as were left out in the plaint and also the claims for the entire period were put forth in the claim petition. It was not a reference made through the Court and, therefore, the plaintiff-respondent was not unjustified in putting in all the claims that he had against the Railway administration and which were being disputed as, under clause 33 of the agreement, the disputes or differences had to be referred to the arbitrator. We also do not find any substance in the contention of the learned counsel for the appellant that there was any patent error of law apparent on the face of the award. In the result, we find that the award cannot be sustained as the arbitrator had failed to decide the points of difference on which he was required to make the adjudication.
49. The next question is what order is to be passed. As we have already observed, no dishonesty or mala fides have been imputed by either party to the arbitrator. Therefore, when the award is incomplete In material particulars, it is a cased, Mr. Vyas submits, where the dispute should be referred back to the arbitrator for a proper determination of the several points of difference referred to the arbitrator and then he should give his award in the light of his decision on such points.
50. Mr. Maghraj, on the other hand, opposes this submission and urges that as it is a case of legal misconduct in the proceedings on the part of the arbitrator, we should set aside the award under Section 30 of the Arbitration Act. Now, for appreciating the respective contentions, we may reproduce sections 16 and 30 of the Act here under:--
'Section 16 -- Power to remit award -
(1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrator or umpire for reconsideration upon such terms as it thinks fit -
(a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matter referred: or
(b) where the award is so indefinite as to be incapable of execution; or
(c) where an objection to the legality of the award is apparent upon the face of it.
(2) Where an award is remitted under Sub-section (1) the court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court : provided that any time so fixed may be extended by subsequent order of the Court.
(3) An award remitted under Sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed'.
'Section 30 -- Grounds for setting aside award. -
An award shall not be set aside except on one or more of the following grounds, namely :
(a) that an arbitrator or umpire has misconducted himself or the proceedings;
(b) that an award has been made after the Issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;
(c) that an award has been improperly procured or is otherwise invalid.'
Sec 30 contains a negative command that an award shall not be set aside save on one or more of the grounds mentioned in the section On the other hand. Section 16 vests the Court with a discretion to remit an award where the award has left undetermined any of the matters referred to arbitration, We have already adverted to in the earlier part of our judgment as to what is the concept of misconduct within the meaning of section 30 of the Act. Misconduct may consist either in the arbitrator being dishonestly motivated or it may just be legal misconduct implying thereby that the arbitrator has not conduct- ed the proceedings properly. In a case where there is no misconduct in the sense that the arbitrator was animated by ill-will or dishonesty but he has committed legal misconduct in the sense that he, on account of some in xplicable reasons has failed to determine all the points of dispute referred to him, then, in our opinion, the Court is not bound to set aside the award. As Section 16 clearly envisages the situation where the award has left undetermined any of the matters referred to arbitration, we think the Court will be entitled to consider whether in the circumstances of the case it should exercise its discretion under Section 16 of the Act. To some extent, the provisions of clause (a) of Sub-Section (1) of Section 16 of the Act overlap the concept of legal misconduct where it consists in the arbitrator failing to discharge his essential functions by not deciding all the points referred to him. Present is a case of this type and, in our view, the Court is not debarred from dealing with the matter under Section 16 of the Act. We have gone through some of the cases that had been dealt with under the Arbitration Act in force prior to 1940.
51. In Harisingh Nehalchand v. Kankinarah Co. Ltd., AIR 1921 Cal 657, the learned Judges were dealing with a case where the arbitrator had committed an irregularity in procedure in that he did not give proper hearing to one of the parties. He examined some evidence of one party behind the back of the other. The Court held that this was misconduct sufficient to vitiate the award. The Court then proceeded to consider whether the award, in the circumstances, should be set aside or it should only be remitted. In exercising its discretion in remitting the award, it was guided by the consideration that there was no imputation of dishonesty or partiality on the part of the arbitrator. It was a case where the arbitrator had merely failed to exercise all his powers properly. The learned Judges referred to a number of English cases and observed as follows:--
'The appellants have urged that the award should be set aside and the matters In controversy investigated in Court. We are unable to accept this contention in the circumstances of the present case. There can be no doubt that the Court may remit the award where the arbitrator has been guilty of misconduct in a technical sense, that is, If the misconduct is of such a nature as does not disqualify him from acting or render it impossible for the Court to trust him. If the arbitrator is guilty of fraud or partiality or such like misconduct, as would justify his removal, the Court will not remit the award. But where the arbitrator has merely failed to exercise all his powers or has improperly exercised a discretion, such as, hearing witnesses or consulting documents in the absence of the parties, and this has happened in spite of a complete absence of dishonest motive, the Court will not hesitate to remit the award to the arbitrator instead of setting it aside. This is in accord with the course adopted in Annmg v. Hartley, (1858) 27 LJ Ex. 145 and Davenport v. Vickery, (1861) 9 WR (Eng.) 701 and with the opinion expressed by Romilly M. R. in Re, Tidswell. (1863) 33 Beav. 213.'
52. We have not been able to lay our hands on any case that may have arisen under the Arbitration Act of 1940. However, after carefully considering the language of the two sections, namely, sections 16 and 30 of Act, we are satisfied that in a case where there is no imputation of dishonesty or partiality against the arbitrator and he has merely committed an irregularity in the procedure by his failure to determine all the points of difference referred to him, then in such a case it will be open to the court to deal with the matter under section 16(1)(a) of the Act. As we have already pointed out, in some measure, the provisions of clause (a) of Sub-section (1) of Section 16 of the Act overlap the concept of legal misconduct within the meaning of Section 30 of the Act. We may, however, make it clear that it would always depend on the facts and circumstances of each case how the discretion vested in court should be exercised in remitting the award.
53. We, therefore, accept this appeal, but without setting aside the award under Section 30 of the Arbitration Act, 1940. we set aside the judgment and decree of the learned District Judge, Bikaner, dated 28-10-63 and remand the case to him with the direction that he shall remit the award to the arbitrator and ask him to determine the issues left undecided by him and then decide what amount would be payable by one party to the other. The learned District Judge shall fix the period within which the arbitrator shall decide the matter and submit his decision to the learned District Judge.
54. In view of our decision in the appeal, the cross-objection filed by the respondent automatically fails and is hereby dismissed.
55. The costs of the appeal will abide the final result.