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Damodar Valley Corporation Vs. Ikrah Nandi Coal Co. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 80 of 1967
Judge
Reported inAIR1972Cal153
ActsArbitration Act, 1940 - Sections 2, 30 and 39
AppellantDamodar Valley Corporation
Respondentikrah Nandi Coal Co.
Appellant AdvocateTapodhan Krishna Rai Dastidar and ;Dhruba Kumar Mukherjee, Advs.
Respondent AdvocateNani Coomer Chakrabarti and ;Kanika Banerjee, Advs.
DispositionAppeal dismissed
Cases ReferredCo. Ltd. v. Ruttanji Ramji
Excerpt:
- amaresh roy, j.1. this appeal by damodar valley corporation is directed against the judgment and order passed by a subordinate judge at ali-pore dismissing the application made by the said corporation under sections 30 and 33 of arbitration act, 1940 praying for setting aside an award or in the alternative modifying the same and if necessary for superseding the arbitration agreement between the said corporation and the respondent firm m/s. ikrah nandi coal co.2. material facts are that in april 1962 d. v. c. invited tenders for supply of 375000 tonnes of coal by road. ikrah nandi coal co. submitted tenderon 21-5-1962. after the parties obtain-ed clarification on some points, on june 9, 1962 the coal co. submitted fresh tender on the basis of supply about 10,000 tonnes of grade ii r. o. m......
Judgment:

Amaresh Roy, J.

1. This appeal by Damodar Valley Corporation is directed against the judgment and order passed by a Subordinate Judge at Ali-pore dismissing the application made by the said Corporation under Sections 30 and 33 of Arbitration Act, 1940 praying for setting aside an Award or in the alternative modifying the same and if necessary for superseding the Arbitration Agreement between the said Corporation and the Respondent firm M/s. Ikrah Nandi Coal Co.

2. Material facts are that in April 1962 D. V. C. invited tenders for supply of 375000 Tonnes of Coal by road. Ikrah Nandi Coal Co. submitted tenderon 21-5-1962. After the parties obtain-ed clarification on some points, on June 9, 1962 the Coal Co. submitted fresh tender on the basis of supply about 10,000 tonnes of Grade II R. O. M. Coal per month to be supplied by rail and on June 14, 1962 the D. V. C. placed order for supply of a quantity of coal by a letter of that date mentioning therein terms and conditions which included inter alia provisions for Transportation by Railway wagons and unloading of Coal wagons by D. V. C. by their Wagon Tippler and also provided for the method of sampling and analysis. In that letter of indent dated June 14, 1962 it was also provided in Clause 10.

'All other terms and conditions and which have not been specified in this letter of indent, for the supply and delivery of coal to the D. V. C.'s Dur-gapur Thermal Power Station Storage Yard of Waria shall be as per D. V. C.'s Tender Specification PE-Spec-101.'

3. The Tender Specification PE-Spec-101 mentioned in that clause is the original tender invited by D. V. C. in April 1962 and Clause 21 thereof contained the arbitration agreement in these terms;

Arbitration

'Except where otherwise provided In the Contract if at any time any question, dispute or difference whatsoever shall arise between the Corporation and the Contractor upon, or in relation to. or in connection with the Con-tract either party may forthwith give to the other notice in writing to the existence of such question, dispute or difference, and the same shall be referred to the adjudication of two arbitrators, one to be nominated by the Corporation and the other to be nominated by the Contractor, or in the case of the said arbitrators not agreeing, then to the Coal Controller, Govt of India, and the award of the arbitrators, or in the event of their not agreeing, of the Coal Controller shall be final and binding on the parties and the provisions of the Indian Arbitration Act. 1940 and of the rules thereunder and any statutory modification thereof shall be deemed to apply to and be incorporated in this Contract.

'Upon every or any such reference, the costs of and incidental to the reference and award respectively shall be in the discretion of the arbitrators or of the Coal Controller, as the case may be, who may determine the amount there-of. or direct the same to be taxed as be-tween Solicitor and Client, or as between party and party and shall direct bv whom and to whom and in what manner the same shall be borne and paid.

'Work under the contract shall be continued by the Contractor during the arbitration proceedings, unless otherwise directed in writing by the Corporation or unless the matter is such that the works cannot possibly be continued until the decision of the arbitrators or of the Coal Controller as the case may be is obtained and save as those which are otherwise expressly provided in the contract no payment due or payable by the Purchaser shall be withheld on account of such arbitration proceedings unless it is the subject-matter or one of the subject-matters thereof.'

4. The order for supply of coal on those terms was accepted by the Coal Co. by their letter dated 16-6-1962 and several consignments of coal were supplied.

5. Soon thereafter correspondence ensued between the parties over draw-ing of samples. As early as on July 6, 1962 D. V. C. wrote to Coal Co. intimating inter alia that no representative from the side of the supplier had been posted at D. T. P. S. and on July 12, 1962 the Coal Co. wrote complaining about alleged incorrect practice of drawing samples. Many letters on that sub-ject were exchanged between the parties, the Coal Co. insisting that their complaint be looked into and D. V. C, insisting that the procedure of sampling adopted was correct. By early dates in November 1962 the Coal Co. was requesting early payment of outstanding Bills and they continued to do so till February 1963. Then on March 7, 1963 the Coal Co. was informed that 4 Bills have been passed for payment and on March 11, 1963 a cheque for Rs. 68,140.77 was sent in payment of four Bills. The Coal Co. intimated receipt of the cheque by letter dated 19-3-1963 but raised dispute over deduction of Rs. 17,352.39 on those four Bills and desired to refer the said dispute to arbitration proposing the name of Shri S. N. Mullick as Arbitrator from their side. Towards end of March 1963 differences also arose regard-Ing Coal Co.'s claim for Sales Tax and eligibility to get Declaration Form for the same.

6. On 15-5-1963 the Coal Co. gave notice to D. V. C. under Clause 21 and nominated Shri S. N. Mullick as their nominee to be Arbitrator. By letter dated 20-8-1963 D. V. C. nominated Shri J. G. Kumarmangalam as Arbitrator.

7. Arbitrators On 12-10-1963 Informed the parties that they have entered on the reference and directed the parties to file their respective written statements. Ikrah Nandi Coal Co. filed their written statement on 11th November 1963 and D. V. C. filed their Counter Statement on 17-1-1964. A rebut-ting statement was filed by the Coal Co. on 11-2-1964.

8. Hearing commenced before the Arbitrators on 12-12-1964. Proceedings before the Arbitrators appear from the Minutes of those proceedings on the record, and relevant particularities thereof will be discussed when we deal with contentions raised in respect thereof. But we may mention here that on 18-12-1964 upon an application made by Ikrah Nandi Coal Co. the Subordinate Judge, first Court Alipore in Misc. Case No. 88/ 64 extended the time for making and publishing Award till 18-6-1965 and a certified copy of that order was filed before the Arbitrators on 23-12-1964. Parties filed their documents on 19-12-1964 and 26-12-1964. Thereafter the Arbitrators framed issues on 13-1-1965. The issues framed were in these terms :

1. Whether the method of drawing representative samples adopted by DVC of coal supplied by railway wagons by M/s. Ikrah Nandi Coal Co. was in conformity with the procedure laid down by the Indian Standards Institution or any other accepted conventional method.

2. fa) If the answer to the question No. 1 is in the negative, whether penalties deducted on the ground of alleged inferior quality and lower calorific value of such coal assessed by Damodar Valley Corporation as a result of the aforesaid sampling and analysis of coal is justified;

(b) If any, what interest the Ikrah Nandi Coal Co. is entitled to as a result of deduction of Rs. 17,352.39 paise by DVC from their bills over and above the payment of the said sum of Rupees 17,352.39 p. not paid by DVC.

3. (a) Whether the DVC failed to pay the bills of M/s. Ikrah Nandi Coal Co. against supply of (a) coal and (b) railway freight within time specified in the contract.

(b) If the answer is in the affirmative what amount of interest the Ikrah Nandi Coal Co. is entitled to receive for such failure from DVC.

4. Whether the Ikrah Nandi Coal Co. is entitled to any damages from DVC for the earlier determination of the contract, and if so what amount Ikrah Nandi Coal Co. is entitled to.

5. To what relief the parties are entitled to?

The next date of hearing will be Intimated to the parties in due course.

9. In the Minute dated 22-5-1965 the Arbitrators recorded certain procedure to be followed regarding documents filed by respective parties and then said :

'After discussion regarding the first issue as framed by the Arbitrators,namely, whether the method of drawing samples of coal supplied by Ikrah Nandi Coal Co. by rail was in conformity with the procedure laid down by the Indian Standards Institution or In accordance with any other accepted conventional method, it is noted that both parties would not lead any evidence.

The same position arises in the second issue which in any case is ancillary to the first issue.

The Solicitor for Ikrah Nandi Coal Co. stated that he would be leading evidence in regard to issues 3 (a), (b) and 4.'

10. The Arbitrators then proceeded to examine witnesses and to hear arguments. They made and published the Award on 6-7-1965 and the Award together with depositions of witnesses and documents were filed in the Court of the Subordinate Judge on 8-7-1965. It was registered as T. S. No. 83 of 1965 in that Court.

11. Notice of filing of Award in the Court was received by D. V. C. on 12-7-1965, and application under Sections 30 and 33 of Arbitration Act was made on their behalf on 9-8-1965. That application was registered as Misc. Case No. 55 of 1965 in the Court of the Subordinate Judge. In that application various defects in conducting the proceedings before the Arbitrators were alleged and averments regarding merits of the contentions for the D. V. C. were made and then in paragraph 25 grounds were set out for contending that;

'Award dated the 12th June, 1965 is erroneous, illegal without jurisdiction, void, inoperative, of no effect whatsoever, not binding on your petitioner and ought to be set aside.'

Prayer in the petition was :

'Your petitioner therefore humbly prays your Honour for an order that the said Award dated the 12th June, 1965 be set aside and in the alternative be varied and/or modified, and if necessary the said Arbitration agreement be superseded, costs of and incidental to this application be paid by the respondent to your petitioner and further suitable orders be made and necessary directions be given.'

12. After notices were issued and the parties appeared before the learned Subordinate Judge and filed Affidavits the case was taken up for hearing on 4-6-1966. Arguments closed on 1-7-1966 and the learned Subordinate Judge delivered the judgment on 21-7-1966 dismissing the application under Sections 30 and 33 on contest with costs.

13. Before the learned Subordinate Judge the points that were urged on behalf of D. V. C. have been cata-logued in the judgment appealed from this.-

1. Is the application not maintainable in view of the fact that it was not supported by affidavit at the outset Should the petitioner be given the opportunity to remove the defect as prayed for?

2. Have the arbitrators misconducted themselves or the proceedings so as to merit an order setting aside the award)

3. Is there any error apparent on the face of the award? Does it offend the principles of natural justice?

4. Should the award be, even, partially modified or varied?

Should the arbitration agreement be superseded?

14. On all the points the learned Subordinate Judge held against the contentions urged on behalf of D. V. C. Before us in this appeal Mr. Tapadhir Rai Dastidar the learned Advocate for the appellant has limited his contentions only to some of those points and also urged some new points for contending that the Arbitrators have lapsed into legal misconduct. Misconduct of any other kind has not been alleged. His contentions were :--

(1) There was no valid reference to Arbitration and therefore the Award should be set aside.

(2) The minutes of the proceeding before the Arbitrators show that some of the minutes bear signature of only one of the two Arbitrators, so there has not been joint deliberation on some of the material points. That has amounted to misconduct of the proceedings and the Award should be superseded.

(3) Method of Sampling whether It was correct or incorrect was not within the scope of arbitration, and therefore that part of the Award should be modified or varied.

(4) For their decision that method of sampling prevailing at the time, the Arbitrators have not taken into consideration other conventional methods but have gone by British Standard only. though they have given reasons for deciding that as the correct method. That is an error apparent on the face of the record and the Award should be set aside.

(5) Deductions made for inferior quality of coal and also for sales tax on those quantities have resulted in double deductions, which is an error on the face of the record and the Award should be modified to that extent.

(6) Rs. 650/- awarded by Arbitrators as compensation for wrongful detention of payment has been illegal and beyond the scope of reference, and that part of the award should be set aside or modified.

15. We will proceed to deal with these contentions one by one. For each of those it is necessary first to ascertain the nature of dispute between the parties that was referred to Arbitration. Primarily it was the dispute over the deductions made in the four bills on the ground of low quality of coal, ascertained by D. V. C. by sample and analysis of a method for drawing samples not from each wagon of coal supplied as they arrived, but by adopting a method of collecting samples from carrier belt after coal was discharged by Wagon Tippler.

16. We have already mentioned that after the contract for supply of coal by transporting in Railway Wagons was concluded between the parties in June 1962 and some consignments of coal were supplied, early in July, 1962 correspondence ensued between them regarding arrangements for drawing samples and by middle of July 1962 the Coal Co, was complaining about incorrect practice of drawing samples and D. V. C. was insisting that the procedure of sampling employed by them was correct. On the basis of analysis of samples so drawn, D. V. C. made deductions in four Bills on account of low quality of coal and intimation of those Bills with such deductions having been passed for payment was given to Coal Co. early in March 1963 and on March 11, 1963 a cheque was sent in payment of those four Bills, Each of the bills showed clearly the amounts deducted under each head. Immediately thereafter on March 19, 1963 Coal Co. raised dispute over deduction of Rs. 17,352.39 on those four Bills and desired to refer the said dispute to arbitration. Towards end of March 1963 differences also arose regarding Coal Co.'s claim for Sales Tax. Notice to D. V. C. for reference to arbitration was given on 15-5-1963 and in that letter Coal Co. nominated their arbitrator. D. V. C. nominated their arbitrator by letter dated 20-8-1963. Arbitrators entered on the reference on 12-10-1963.

17. Mr. Rai Dastidar referring to the correspondence over the disputes contended that there was no clear statement in any of those letters taken singly or collectively as to the matters that were referred to Arbitration. But those correspondence instead of being taken in their isolation, properly need be taken along with the four Bills and deductions made therein on different heads which were being disputed. Those Bills clearly show with exact definiteness the field of differences and scope of reference to arbitration. Mr. Rai Dastidar's first contention that there was not avalid reference has no substance and must fail.

18. The second contention of Mr. Rai Dastidar that it should be held that there has been legal misconduct on the part of the two Arbitrators by their omission of joint deliberations on certain days of the arbitration proceeding appears to us to be equally unsubstan-tial. The contention is based on the feature that minutes on some days appear to have been signed not by both the arbitrators, but only by one of them. The minutes of the proceeding are no more than memorandum kept by the Arbitrators for their own aid. There is no provision in law that compels the Arbitrators to keep minutes of proceeding, nor to enjoin that minutes must be signed by all the arbitrators or even those be signed at all by any of the arbitrators. Correctness of the minutes were not disputed either before the arbitrators or before the learned Subordinate Judge or before us. What was contended is that because only one signature appears in the minute, therefore it should be inferred that the other arbitrator was not present during the proceedings of that particular day and so there has been omission of joint deliberations of the arbitrators on matters mentioned in the particular minute. Internal materials in those minutes themselves completely negative the contention. In each of those presence of both the Arbitrators has been expressly mentioned in the beginning of the minute and the contents also show that both the Arbitrators were present. The memorandum that the minutes are, may have been drawn up and signed by one of the two arbitrators on the particular day. Yet so long as the other arbitrator accepted the correctness of the memorandum and parties did not even dispute that correctness, it does not spell out any omission of joint deliberation of both the arbitrators. The Award has been signed by both. This contention does not appear to have been raised either before the Arbitrators or in the Court of the Subordinate Judge. It was raised for the first time during arguments before us. We hold that absence of signature of one or the other Arbitrators in some of the minutes does not constitute any misconduct in the proceeding nor any error apparent on the face of the record. The Award of the arbitrators has not suffered any defect on that score. The second contention of Mr. Rai Dastidar therefore fails.

19. The third contention of Mr. Rai Dastidar the learned Advocate for the Appellant before us was that under issues Nos. 1, 2 (a) and 2 (b) framed bythe arbitrators they have said in the Award.

'on the basis of the documents produced before us and the evidence laid before us we are satisfied that the method of drawing representative sum adopted by D. V. C. was not the correct method then existed as the Indian Standards specification prevalent at that time was to draw samples from the wagons before they were unloaded which was the practice followed by the D. V. C. also on earlier occasions.'

This, according to Mr. Rai Dastidar, was outside the scope of the reference to arbitration because, he said correctness or incorrectness of method of sample was not within scope of arbitration and he also contended that in coming to that conclusion the arbitrators have not answered that part of the issue No. 1 which relates to any other accepted conventional method. In support of this contention Mr. Rai Dastidar not only emphasised the particular language employed in the frame of issue No. 1 by the arbitrators, but also referred to the minutes before the arbitrators dated 22nd May 1965, in which minute it has been recorded 'after discussion regarding the first issue as framed by the arbitrators viz., whether the method of drawing samples of coal supplied by Ikrah Nandi Coal Co. by Rail was in conformity with the procedure laid down by the Indian Standards Institutions or in accordance with any other accepted conventional method. It is noted that both parties would not lead any evidence.

20. The same position arose in the second issue which in any case is ancillary to the first issue,

21. The Solicitor for Ikrah Nandi Coal Co. stated that he would be leading evidence in regard to issues 3 (a) (b) and 4.

22. Mr. Rai Dastider drew our attention to the record of deposition of witnesses before the Arbitrators for contending that although parties had agreed not to lead evidence on matters concerning issues Nos. 1 and 2, questions were asked and witnesses were allowed to give answers which were on those matters. For considering Mr. Rai Das-tider's contention that this constitutes misconduct of the procedure or error apparent on the face of record we have also to keep in mind that Mr. Rai Dastider also contended that reliance by the arbitrators on the evidence for deciding issues No. 1, 2 fa) and 2 (b) itself constituted misconduct of the procedures because the parties before the arbitrators had agreed not to give evidence on those issues. Mr. Rai Dastider's contention regarding the scope of the arbi-tration is completely answered by the notice under Clause 21 of the specification No. P-Spec.-101 given by Ikrah Nandi Coal Co. by their registered letter dated 15th May 1963 which constitutes letter of reference in the present case. Clause (a) of that notice is exactly what Mr. Rai Dastider says was not included in the reference to arbitration. The second branch of Mr. Rai Dastider's contention based on what the minute dated 22nd May contains is untenable because that minute itself shows that parties had filed documents bearing on the issues Nos. 1, 2 fa) and 2 (b). Thereafter what the parties agreed on was that no oral evidence will be adduced on those questions. The previous minutes also show that the arbitrators not only had before them documentary evidence bearing on those issues but they also decided to visit Waria Thermal Power Station and visited Durgapur Thermal Power Station on 22nd December 1964 and also they decided to compile a aues-tionnaire in connection with their visit of the Durgapur Thermal Power Station at Waria to be forwarded to Damodar Valley Corporation, any answer in respect of which was directed to be submitted to the arbitrator within a fortnight from the date of the receipt of the questionnaire. Those were undoubtedly intended to be evidence. The D. V. C. however did not send any answer to the questionnaire. We may mention here that the learned Advocate for the respondent Nani Coomar Chakravarty also pointed out that in the records of the arbitrators, which were filed in the court of the Subordinate Judge and has been sent to this Court, there is a printed copy of Indian Standards Method for Sampling of Coal and Coke (tentative) reprinted 1956 and also a typed copy of proposed draft. Indian Standard Method of Sampling of Coal and Coke (Revisions of I. S. 436-953) which appear to have been sent by the Indian Mining Association to the Secretary Indian Mining Federation and other associations by their covering letter dated 27th September 1961 and also printed copy of Indian Standard Method of Sampling of Coal and Coke (Pt. I Sampling of Coal revised) which appears at No. I. S. : 436 (Part I)-1964. These are undoubtedly documentary evidence which the arbitrators had availed of and in view thereof the parties in their proper and reasonable attitude before the arbitrators agreed not to adduce oral evidence on such matters.

23. Mr. Rai Dastider during his reply tended so much so as to contend that the documents mentioned above do not bear the seal of the court of the Subordinate Judge at Alipore whichshould raise a doubt if those documents formed part of the record of the arbitrators which were filed in the court of the Subordinate Judge and Mr. Chakravorty may not have been properly instructed for thinking that those treatises of the Indian Standards specification were really materials before the arbitrators. This doubt of Mr. Rai Dastider implies that the treatises we have mentioned above found their way in the file which is part of the record sent from the court of the Subordinate Judge to this Court by some questionable means. That in our view is as much uncharitable as it is unreasonable. We are satisfied that Mr. Rai Dastider has been very wrongly instructed to raise that contention. The documents mentioned above were produced before us from the file in which the other records of the arbitrators including the signed minutes of the arbitration bearing seal of the Court of the Subordinate Judge are included. Mr. Rai Dastider rightly noticed that the printed booklets and the type-written proposed draft do not bear the seal of the Court of the Subordinate Judge. The reason is obvious to us and should have been so to the learned Advocate. Those technical documents mainly printed matters were considered to be scientific treatises and not documents proved as evidence in the proceeding. That is why in the court of the Subordinate Judge the seal of the Court was not affixed on them. We are of the view that contention of Mr. Rai Dastider had no legs to stand upon and the learned Subordinate Judge is right in his finding that the arbitrators cannot be held guilty of misconduct or to outstrip the limit of reference by taking evidence in determining issues Nos. 1 and 2 (a) and 2 (b) contrary to their own direction on the basis of agreement between the parties. In the examination of witnesses the questions asked both in Examination-in-Chief and in cross-examination to which Mr. Rai Dastidar drew our attention have bearing on other issues framed by the Arbitrators, which overlapped each other, and also were asked to obtain explanations of materials in the printed booklets which were of the nature of scientific treatises. Those did not bring about any mishandling of the proceedings and therefore cannot be viewed as misconduct on the part of the Arbitrators.

24. The fourth contention raised before us by Mr. Rai Dastidar that the arbitrators for deciding on the method of sampling prevailing at the relevant time have not taken into consideration other conventional methods appears to us to be without substance because in the evidence adduced by the partiesboth oral and documentary before the arbitrators, the other unconventional methods of sampling of coal loomed very large indeed and Mr. Rai Dastider has himself referred to those evidence in connection with his contention that those were taken in the record by procedural misconduct which we have dealt with in the previous point urged by Mr. Rai Dastider. This point urged by Mr. Rai Dastider and the remaining two other points, one regarding the deductions made for sales-tax and the other regarding award of Rs. 650/- for wrongful detention of payment are matters which are not within the scope of this Appeal. This being an appeal under Section 39 of the Arbitration Act its scope is limited by Section 30, Clause (a) of which is only relevant for our purpose. The Section is quoted below :

'Section 30. 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 proceeding have become invalid under Section 35;

(c) that an award has been improperly procured or is otherwise invalid.'

25. An error of law which can be made a ground for setting aside an Award of the Arbitrators, has been well settled by authoritative decisions since the middle of the last century. In an English decision of 1857 reported in Hodgkinson v. Fernie, (1857) 3 CB (NS) 189, 202 = 140 ER 712 Williams, J. said :

'The law has for many years been settled, and remains so at this day that where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions of both of law and of fact.'

26. He however noted an exception, which he regretted and also doubted its propriety, yet considered it as 'firmly established'. That exception is 'when a question of law necessarily arises on the face of the Award.' Supreme Court cited that with approval in Union of India v. Bungo Steel Furniture Pvt. Ltd., : [1967]1SCR324 . Long before that, the observations of Williams, J. were characterised by Lord Dunedin in 50 Ind App 324 = (AIR 1923 PC 66) (Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd.) as 'the law on the subject (which) has never been more clearly stated' and the learned Lord said 'Now the regret expressed by Williams, J. in (1857) 3 CB NS 189 = 140 ER 712 has been repeated by more than one learned Judge and it is certainly not to be desired that the exception should be in any way extended. In that judgment of Privy Council reported in 50 Ind App 324 = (AIR 1923 PC 66) Lord Dunedin said :

'An error of law on the face of the award means, in their Lordships' view, that you can find in the award or in a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.'

27. Without burdening this judgment with the plethora of decisions on the point we may at once refer to the recent decision of the Supreme Court in the case of Alien Berry & Co. Pvt. Ltd. v. Union of India, reported in : [1971]3SCR282 (April issue). In that judgment the previous decisions have been fully discussed and their Lordships laid down;

'the Rule thus is that as the parties chose their own arbitrator to be the Judge in the dispute between them, they cannot, when the award is good on the face of it. object to the decision either upon the law or the facts. Therefore even when the arbitrator commits a mistake either in law or in fact in determining the matters referred to him, but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside notwithstanding the mistake.'

28. Applying those principles and law laid down by the Supreme Court in the above decision, in the present case we find here in the award that the arbitrators did not state any proposition of law when they based their decision on the view that method of sampling applied by D. V. C. was not the correct method. It may be an error of fact. We do not decide it either way, because it is not for the Court to sit in judgment over decision of the Arbitrators on a question of fact. Award cannot be set aside or modified even if there was an error of fact.

29. On the point of award of Rs. 650/- as compensation for wrongful detention of payment, Mr. Rai Dastidar has relied on the decision of the Supreme Court in the case of Thawardas Pheru-mal v. Union of India, : [1955]2SCR48 for contending that it has been without jurisdiction. He has also referred to a later decision in the case of Union of India v. A. L. Rallia Ram, reported in : [1964]3SCR164 in his support.

30. Mr. Chakravorty for the Respondents has pointed out that the Sup-reme Court has taken a different view on that question in the case of Smt Santa Devi v. Dhirendra Nath Sen, reported in : [1964]3SCR410 . He has also relied on the decision of the Privy Council in the case of Bengal Nagpur Rly, Co. Ltd. v. Ruttanji Ramji, reported in 65 Ind App 66 - (AIR 1938 PC 67).

31. In the present case in the contract between the parties there was a stipulation for interest for delayed payments. The Arbitrators in lieu of awarding interest according to that stipulation have awarded a small sum of Rs. 650/- as compensation for long delay in paying Rs. 16,058/- which was deducted in the four Bills in dispute. In our view that has not brought about any transgression of jurisdiction of the Arbi-tratros, and it does not amount to misconduct that would enable court to set aside or modify the Award even to that extent.

32. The Appeal therefore fails and Is dismissed with costs.

A.K. De, J.

33. I agree.


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