TaxTMI 
TaxTMI 
1989 (2) TMI 401
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....for the conclusions arrived at by the arbitrator unless such awards were the result of corruption, fraud or when there were errors apparent on the face of the award. The learned SubJudge further held that there was no error apparent on the face of the record and there was no allegation of corruption or fraud. The High Court reversed the said decision. The questions-involved in these appeals are: how should the court examine an award to find out whether it was a speaking award or not; and if it be a non-speaking award, how and to what extent the court could go to determine whether there was any error apparent on the face of the award to be liable for interference by the court. The other question that arises in this case is, to what extent can the court examine the contract in question though not incorporated or referred to in the award. It may be noted that on 23rd December, 1976 the agreement No. 25/SESPC/1976-77 was entered into between the appellant and the respondent herein for construction of masonary dam across Siruvani river. Certain disputes arose between the appellant and the respondent. These disputes were referred to the arbitrator named in the agreement. The arbitr....
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....ngs. The work had been taken up as part of the scheme for augmenting the drinking water supply to Coimbatore city from the yield of the Siruvani river and due to acute scarcity of water in the city, work was taken up on an urgent footing and it was understood by both the parties that time was of utmost importance in the execution of work. The site for the work was handed over to the claimants on 17th December, 1977 and the work had to be completed by 15.6.1978. Accordingly to the arbitrator, however, it was clear that the work could not be completed within the stipulated period due to various reasons for which each party blamed the other. It was noted in the award that according to the respondents, after carrying out the work to the tune of Rs.3.46 lakhs (approx.) against the accepted probably estimate of contract of Rs. 19.15 lakhs, the appellant refused to proceed with the. balance work in spite of specific notices to them and so the respondents were constrained to terminate the contract at the risk and cost of the appellant. Several efforts were made to re-arrange the balance works and finally as per the situation obtaining then these works were to be expected to be completed at....
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....Of the difficulties arising out of the location of the site of the work, it was emphasised by the respondent that the conditions under which the contract had to be performed were within the knowledge of the parties, and there could not be any ground for claiming any addition than those contemplated in the contract. It was definitely further stated that the additional haulage was due to the alternate route via Thachampara which was opened on 15.2.1977 and that any claim on this account subsequent to the above date was unjustified. Furthermore, that materials like sand, cement and steel were all issued in time and there could hardly be any justification regarding delays on these account. Regarding interruptions in power supply the respondents' case was that such interruptions were not unexpected at a site to which the power lines passed through virgin reserve area, and at any rate the claimants were not assured by the respondents of uninterrupted power and there was hardly any items of machinery belonging to the appellant which had remained idle for want of power. It was further stated that the various extra items of works including the work on the quarries had been adequately pai....
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....free to arrange for the balance work in the manner they thought fit. The counter claim for costs of the respondents was also held by the arbitrator to be covered by other claims. The award was passed on 12th April, 1982. There was another award dated 16th April, 1982 which was with regard to the dispute that arose for controlling the work of "Siruvani Drinking Water Supply Project--Constructing a Masonry dam across Siruvani River Block Nos. I, II and III from Ch. 13 to 60 up to level + 883.00 metres and Block No. III from ch. 60 to 82 upto level + 870 metres". In respect of the aforesaid, an estimate amounting to Rs.71.5 lakhs had been sanctioned for the work and it was entrusted on contract to the appellant. It appears that the value of the work arranged on contract was Rs.67,72,760 as per departmental estimate which the appellant undertook to carry out at a total amount of Rs.76,55,300 as per their tender. The contract was embodied in the aforesaid agreement of 23rd December, 1976. The arbitrator recited the original claim and noted that the work could not be completed during the scheduled time and the respective contentions of the parties were, more or less, identical with the o....
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....for interest is declined. Claim No. 17--The parties shall suffer their respective costs in these proceedings." Regarding the counter claims, it was reiterated by the arbitrator that the respondents were entitled to arrange for the balance work in any manner they deemed fit on the termination of the contract by them. But the appellant should not be responsible for any loss that might be sustained for this re-arrangement. The counter claim for costs of the respondents was also dealt with. There was a third award dated 23.4.1982 which was in respect of the sum due to Blocks Nos.7, 8 & 11. In respect thereof an estimate of Rs.69.7 lakhs had been sanctioned for the work and it was entrusted to the appellant. The value of the work arranged on that contract was Rs.63.68 lakhs as per the departmental estimate which the claimants undertook to carry but at a total amount of Rs.71.96 lakhs as per their tender. After reiterating that time was of the essence of the contract, the difficulties that arose in carrying out the contract and the respective contentions, which were identical with those in respect of the first two contracts were discussed. In respect of interruptions in power su....
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....m No. 13: The retention amounts from the bills of the claimant lying in the hands of the respondents shall be released to them. Claim No. 14: An amount of rupees fifty thousand only (Rs.50,000) shall be paid to the claimants in settlement of the final claims on the work in addition to the specified items as per this award. Claim No. 15: The security offered by the claimants for the work shall be released to them subject to the rules regarding tax clearance. Claim No. 16: The claim for interest is declined. Claim No. 17: The parties shall suffer their respective costs in these proceedings." About the counter claims it was also stated that the claimants would not be responsible to carry out the balance work which the respondents might arrange in any manner they thought fit on termination of the contract, but it should not be at the risk of the claimants. Upon these awards, an application was made before the Court of the Principle Sub-Judge, Trivandrum, for passing decrees' in terms of the award. Objections were also filed. The learned Judge by his judgment and order dated 25th September, 1982 dealt with the objections. He rejected the contention that the claims were ba....
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....ee different judgments were delivered incorporating more or less the same reasons. Being aggrieved thereby the respondent preferred appeals before the High Court. The Division Bench of the High Court by the judgment under appeal in F.M.A. Nos. 72, 346 and 380 of 1983 disposed of the appeals. Being aggrieved thereby, the appellant is before this Court. In the judgment under appeal, the Division Bench of the High Court has set out the claims and noted the rival contentions and referred to the various clauses and the conditions of the contract, though the contract itself was made no part of the award. The Division Bench referred to the decision of the learned Sub-Judge. Before the Division Bench, the main contention which succeeded was that there were errors apparent on the face of award, and further that the arbitrator had misconducted himself and travelled beyond the terms of the contract. On behalf of the appellant, however, it was contended that the award was a nonspeaking award and, hence, it was not open for the court to go into the correctness of the reasons of the award. The High Court referred to the several decisions of this Court and other relevant decisions of the Keral....
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....ot open to the arbitrator or the umpire to arrogate tO himself jurisdiction and answer a question not referred to him. In this connection, reference was made by the High Court to several decisions, namely, Attorney General for Manitoba v. Kelly and Ors., [1922] 1 AC 268; Upper Ganges Valley Electricity Supply Co. Ltd. v. U.P. Electricity Board, [1973] 3 SCR 107; M/s Alopy Parshad & Sons, Ltd. v. The Union of India, [1951] 2 SCR 793 and Jivarajbhai Ujamshi Sheth & Ors. v. Chintamanrao Balaji & Ors., [1964] 5 SCR480. Regarding claim No. 1(b) it was the contention of the respondent that the award was over and above the amounts already paid under various part bills. It was argued before the High Court that the Department had measured and paid for all quantities of earth work and ruble work and the same had been entered in the measurement book and accepted by the contractor. Hence, the award of additional amount was unwarranted. It was also argued that as per clause 10 of Form No. 83 (Notice inviting tender) which formed part of the agreement, every tenderer was expected to inspect the site of the proposed work and quarries, and satisfy himself about the quality and availability of mate....
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.... medical facilities to the contract labourers and that the respondents were not bound to pay any additional medical expenses. The claim on this construction and view of the contract, was held to be not sustainable. The arbitrator had awarded Rs.50,000 by way of damages for sheds and other materials left by the contractor at the site under claim No. 7. It was held by the High Court that it was the duty of the contractor to remove the sheds and materials brought by him and, therefore, the award allowing such claim was definitely against the provision of the contract. On this head it was held that the award by the arbitrator was contrary to the provision of the agreement and as such bad. Regarding claim No. 14 for an additional amount of Rs.50,000 it was held that it was unsustainable and due to the misconduct of the arbitrator that it was awarded. It was further observed that it was beyond the power of the arbitrator as it was against the provisions of the contract. While dealing with that part of the award which exonerated the contractor from the risk after holding that the termination of the contract by the respondent was valid, it was held that the same was opposed to the pr....
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....al Committee in Champsey Bhara & Co. v. Jivraj Balloo Spinning & Weaving Co, Ltd., L 1922 IA 324 has discussed this problem. It was held that an award of arbitration can be set aside on the ground of error of law apparent 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 that case the appellants had sold cotton to the respondents by a contract which contained a submission to arbitration of disputes as to quality, and a further clause submitting to arbitration all other disputes arising out of the contract. Cotton was delivered, but the respondents objected to its quality, and upon arbitration an allowance was awarded; the respondents thereupon rejected the cotton. The appellants claimed damages for the rejection, and upon that dispute being referred to arbitration under the further clause, were awarded damages. The award recited that the contract, the date and subject of which were stated, was subject to the rules of the Bombay Cotton Trade Association, which were....
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....has been stated in M/s. Alopi Parshad & Sons, Ltd. v. The Union of India, (supra). There this Court held that the award was liable to be set aside because of an error apparent on the face of the award. An arbitration award might be set aside on the ground of an error on the face of it when the reasons given for the decision, either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous. But where a specific question is referred, the award is not liable to be set aside on the ground of an error on the face of the award even if the answer to the question involves an erroneous decision on a point of law. But an award which ignores express terms of the contract, is bad. Similarly, in Jivarajbhai Ujamshi Sheth & Ors. v. Chintamanrao Balaji & Ors. (supra), this Court reiterated that an award by an arbitrator is conclusive as a judgment between the parties and the court is entitled to set aside an award if the arbitrator has misconducted himself in the proceeding or when the 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 of th....
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....n for the 'service lines' which were laid with the help of contributions made by consumers, they referred the question to the umpire. The umpire framed an issue and gave a finding that the appellant was not entitled to claim from the respondent the value of the position of the service lines which were laid at the cost of the consumers, for the sole reason that they were laid at the cost of the consumers. The appellant filed an application under section 30 of the Arbitration Act, 1940 challenging the validity of the award on the question. The lower court and the High Court held against the appellant. Allowing the appeal, it was held by this Court that the appellant's application for setting aside the award could succeed only if there was any error of law on the face of the award. There, it was found, that the umpire had made a speaking award and there was no question of the construction of any document incorporated in or appended to the award. If it was transparent from the award that a legal proposition which forms its basis is erroneous, the award is liable to be set aside. An award may be remitted or set aside on the ground that the arbitrator in making it, had exceeded his ju....
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....tewart C. Boyd page 84. The High Court in the judgment under appeal referred to the decision of the Division Bench of the Kerala High Court in State of Kerala v. Poulose, (supra). Our attention was also drawn to the said decision by the counsel for the respondents that if an arbitrator or the umpire travels beyond his jurisdiction and arrogates jurisdiction that does not vest in him, that would be a ground to impeach the award. If an arbitrator, even in a non-speaking award decides contrary to the basic features of the contract, that would vitiate the award, it was held. It may be mentioned that in so far as the decision given that it was possible for the court to construe the terms of the contract to come to a conclusion whether an award made by the arbitrator was possible to be made or not, in our opinion, this is not a correct proposition in law and the several decisions relied by the learned Judge in support of that proposition do not support this proposition. Once there is no dispute as to the contract, what is the interpretation of that contract, is a matter for the arbitrator and on which court cannot substitute its own decision. Reference was also made to the decision....