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Issues: (i) Whether the award disclosed an error of law on the face of the award. (ii) Whether the arbitrator was guilty of misconduct in correcting an issue while making the award. (iii) Whether the arbitrator had power to award pendente lite interest in an arbitration in a suit.
Issue (i): Whether the award disclosed an error of law on the face of the award.
Analysis: An error of law on the face of the award can be found only where the award itself, or a document incorporated in it, discloses a legal proposition that is the basis of the decision and is erroneous. The award here gave no reasons and did not disclose any legal proposition showing a misconception of law. A lump sum award covering both claims was permissible, and the Court could not re-examine the merits of the arbitrator's determination in the absence of an apparent legal error.
Conclusion: The objection was rejected.
Issue (ii): Whether the arbitrator was guilty of misconduct in correcting an issue while making the award.
Analysis: The arbitrator corrected the wording of an issue so that it accurately reflected the respondent's claim for the price of the 46-1/2 bales. The correction caused no prejudice, because both parties had proceeded throughout on the footing that the claim related to price and not merely loss. The change was therefore only a formal correction and did not amount to unfair conduct.
Conclusion: The allegation of misconduct was rejected.
Issue (iii): Whether the arbitrator had power to award pendente lite interest in an arbitration in a suit.
Analysis: The Court distinguished earlier observations suggesting that an arbitrator cannot award interest from the date of suit. Where all disputes in the suit are referred to arbitration, and one such dispute is entitlement to pendente lite interest, the arbitrator may decide that question and grant interest as a court could under Section 34 of the Code of Civil Procedure, 1908. The power is not excluded by the arbitration agreement or by the Arbitration Act, 1940.
Conclusion: The arbitrator had power to award pendente lite interest.
Final Conclusion: The award was upheld and the challenge to it failed, leaving the respondent's entitlement under the award intact.
Ratio Decidendi: In an arbitration arising out of a suit, where the disputes referred include entitlement to pendente lite interest, the arbitrator may award such interest as a court could under Section 34 of the Code of Civil Procedure, 1908, and an award cannot be set aside for error of law unless the legal error appears on the face of the award.
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